Easter Sales Struggle to Meet Projections
An unusually late Easter wasn’t worth the wait for retailers who saw sales fall short of projections. According to the International Council of Shopping Centers (ICSC), sales for the week ending April 24 rose 3.2% compared to the same week in 2010. But they rose just 0.4% from the previous week, hinting that the run-up to Easter didn’t generate much enthusiasm among shoppers.
“Sales advanced ahead of Easter because of consumer demand for spring apparel, candy, food and other holiday items,” said ICSC chief economist Michael Niemira, adding that sales weren’t helped by “rising fuel prices and consumers reporting more and more hardship as a result.”
Easter sales numbers didn’t live up to National Retail Federation (NRF) forecasts, which predicted sales would jump about 9 percent. A survey conducted by the NRF projected the average consumer would spend $131.04 on Easter products compared to just $118.60 in 2010. Consumers were expected to spend an average of $40.05 on food – compared to $37.45 last year – and $18.55 on candy compared to $17.29 in 2010.
The NRF based its optimistic forecast in part on the late arrival of Easter, which fell on April 24 and made it the latest Easter since 1943. “Due to such a late holiday, Easter promotions will last all spring long,” said NRF president and CEO Matthew Shay. “Though lingering concerns about food and energy prices may keep shoppers from splurging, retailers are expecting consumers to stock up on apparel, home décor and food and candy.”
NRF executive VP Phil Rist was less enthusiastic, noting that “while spending is expected to improve from the past few years, families are still sticking to a budget with an eagle eye on low prices.”
No doubt, when the NRF conducted its Easter survey in March, it had no way of knowing gas prices would continue to skyrocket. The U.S. Energy Information Agency reported that gasoline prices the week before Easter averaged $3.88 a gallon, 36.2 percent higher than they were during the same week in 2010. That’s the highest price consumers have paid for gas since August 2008.
Even Wal-Mart felt the pinch. While it didn’t release its sales results for Easter week, Wal-Mart CEO Mike Duke said its sales were hurt by rising gas prices. “There’s no doubt rising fuel prices are having an impact on our customers,” said Duke. “There’s more pressure (on customers).”
Duke said managers at the store level are seeing steep drops in traffic towards the end of each month - when large bills like rent come due - and a big jump in sales the days after consumers get paychecks or checks from the government. Wal-Mart also reported a drop in sales of clothing and other discretionary items.
When gas prices rise, mass merchants and off-price retailers such as dollar stores are the first to see their sales decrease, since their core consumers tend to have lower incomes than retail channels like department stores or membership clubs.