by Doug Desjardins
In what retailers hope is a sign of things to come for 2010, retail sales posted an unexpected gain during the holidays and eclipsed even the most optimistic forecasts. 
According to the MasterCard Advisors SpendingPulse survey, retail sales increased 3.6 percent for the period from Nov. 1 to Dec. 24. Though the sales numbers were helped by Christmas falling on a Friday this year instead of Thursday in 2008 - providing an extra day of shopping between Thanksgiving and Christmas - they were still better than expected, even with the extra day factored in.
"This year, we've seen increasing stability in spending as opposed to the freefall in 2008," said SpendingPulse VP of research and analysis Michael McNamara in a statement. In 2008, retail sales fell 3.4 percent as spending steadily deteriorated throughout the holiday season.
Sales of electronics posted the largest gain, increasing 5.9 percent, followed by a surprising 5.6 percent gain in jewelry sales. Men's clothing sales improved by 3.9 percent along with footwear, with sales jumping 5 percent. The jump in jewelry and apparel sales is encouraging, since those categories had been slumping badly since 2008 when consumers began cutting back on discretionary spending.
Some analysts credited smart promotions by retailers and their decision to not repeat the fire sales of 2008 for improved sales. "There was better equilibrium between consumer demand, promotions and overall price level," said Richard Hastings of Global Hunter Securities. "The industry did a very good job and it's getting better."
Sales continued to surge right through Christmas week, according to the International Council of Shopping Centers (ICSC). The group estimates that chain-store sales for the week ending Dec. 26 rose 2.3 percent compared to last year. "Consumers were out in full force to finish shopping and preliminary indications appear that sales are on track (to meet expectations)," said ICSC chief economist Michael Niemira. The ICSC is projecting a 2 percent increase in holiday sales.
But not everyone is hailing the jump in sales as a sign that the slump in retail sales is over. MasterCard acknowledges that the extra shopping day added a 2.6 percent bump to sales, which lowers the increase to 1 percent when it's taken out of the equation. And the numbers are being compared to a 2008 holiday sales season that was one of the worst in 40 years.
"Holiday sales can be described in one word: adequate," said Marshall Cohen, chief retail analyst for research firm The NPD Group. NPD and other groups will provide a more complete picture of the holiday sales season in early January when they release December sales estimates.
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Holiday Sales Rose an Estimated 3.6%, SpendingPulse Says
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