Retail sales still tepid due to energy costs and tapped out consumers

The New York Times today notes that many retailers, fearing that today's last-minute buying spree will fail to make up for ho-hum sales growth this season, are looking past the holiday weekend and planning an aggressive Monday marketing blitz.. Blackfriars previously forecast weak holiday sales back in September because of the triple whammy of high energy costs, high pass-through product prices, and increased taxes. While retailers tried to spur buying by a variety of offers of free shipping, big discounts, and staying open late on Christmas Eve, consumers appear to be just too tapped out this holiday season to deliver any serious growth in holiday shopping. We predict that holiday sales will be up slightly from last year (our estimate is about 4%), but that will be a far cry from the 7% expected before the season started.

The good news? As noted in the Times article, retailers are planning more special marketing programs after Christmas this year to make up for the tepid holiday sales. But don't shop those sales looking for specials on the hottest products such as iPods and XBox 360s. Both of those lines of products are still so much in demand that few stores will have them available, and the few that do won't be discounting them.

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