Consumers left behind their ultra frugal ways this holiday season, but they're still cautious and are feeling the pressures of high unemployment and underemployment and the rising bills for daily living necessities like gas.
That was the explanation given by some retail analysts and experts after the release of two retail reports this week pointing to strong holiday sales for merchants as well as a survey showing consumer confidence fell in December.
The International Council of Shopping Centers' chain-store sales index Tuesday reported that sales for the week ending on Christmas rose 1 percent compared with the previous week and 4.8 percent compared with the same period last year. MasterCard Advisors' SpendingPulse, a report tracking national retail and services sales, said that holiday sales, excluding automobiles, grew by 5.5 percent compared with last year. But The Conference Board's Consumer Confidence Index dropped to 52.5 in December from 54.3 in November.
"November was better than normal . . . but I think we're going to be surprised that December is not as good as November with the loss of two days - Christmas and the snowstorm," said Marshal Cohen, chief industry analyst for The NPD Group, a Port Washington market research firm.
The National Retail Federation counts the holiday season as November and December sales. He added, "I have to tell everyone to curb your enthusiasm."
Many retailers launched their holiday sales two to three weeks earlier this year and consumers took advantage of the promotions, Cohen said. But in December they likely pulled back. It was not clear until the last minute that Congress was going to extend the Bush-era tax cuts, and at the same time gas and other commodity prices were rising and many Long Island homeowners received their property tax bills, he noted.
Many shoppers also replaced necessities but continue to be price-conscious, picking cheaper items and buying at lower-priced retailers, said Barry Berman, a Hofstra business professor.
"It's not just the unemployed," Berman said. "Many people are underemployed and don't know if they are going to keep their jobs, and people are pushed to stretch more and work harder."
Some local retailers are poised for an increase in annual and holiday sales but say that shoppers are still largely motivated by sales.
Kerry Punzi, owner of the Cook's Fancy, a Rockville Centre gift shop, said sales for the entire year up until Christmas were up 6.7 percent compared to last year. This week, interrupted by Monday's blizzard, will determine the final tally for her holiday sales.
"We definitely have more customers than last year, but I think they're more cautious," Punzi said. "I think the mentality is buy on sale."
The Willy Nilly Trading Co., a Bay Shore gift shop, is expecting holiday sales to increase by 15 percent compared with last year and annual revenue to rise by 15 percent as well, owner Marilyn Schulman said.
While the average amount spent per person has declined slightly, she said she has added customers and has a variety of items at midrange prices, she said.
Schulman says she has noticed the growing use of debit cards and cash.
"I never saw so much cash or debit used," she said. "In a sense, people didn't want to go into debt."