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The Boston Globe

Business

Holiday sales a big letdown for US retailers

Early results indicate growth was slowest since 2008 across country

Politics, extreme weather, and economic uncertainty kept many consumers from spending freely in recent months and contributed to a disappointing holiday shopping season, analysts said.

Although post-Christmas sales and gift cards could yet boost the final numbers for retailers, few analysts expect the totals to come close to earlier projections. Retailers nationwide saw sales between Oct. 30 and Dec. 24 grow by less than 1 percent compared with last year, according to MasterCard Advisors SpendingPulse. The national survey tracks key holiday sales categories, such as electronics, jewelry, and furnishings as well as online sales.

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That’s the weakest growth since 2008, when the economy was in recession, according to SpendingPulse, and was far below the 4.1 percent increase predicted by the National Retail Federation.

The Retailers Association of Massachusetts projected holiday sales here would increase 3.5 percent from last year. But Jon Hurst, the association’s president, said it’s unlikely local retailers will reach that figure.

Give the uncertain economy, Hurst said, “it could be a whole lot worse.”

The holiday shopping season is particularly important to retailers; for some, it can represent 20 to 40 percent of annual sales, according to the National Retail Federation. Several factors helped keep shoppers out of the stores or spending cautiously this year, analysts said.

Hurricane Sandy hit the Northeast hard, leaving consumers to skip presents in favor of necessities. The shootings in Newtown, Conn., devastated the nation, leading many people to cut back on spending and instead reflect on the holiday’s more emotional meaning.

The so-called fiscal cliff and Washington’s inability to find a tax-and-spending compromise to avoid a potential recession also contributed to consumers’ unease about the economy, analysts said. The fiscal cliff is the name given to the combination of steep tax increases and deep budget cuts that go into effect next month unless Congress acts.

“I’m not sure everyone knows what the fiscal cliff means, but they do know Washington can’t figure it out,” said Madison Riley, managing partner for the New York management consulting firm Kurt Salmon Associates. “So much of our economy is consumer-based, [so] when the consumer begins to pull back and shows some reservation as I think they might have here, it has a huge impact.”

Consumer spending accounts for about 70 percent of the US economy, and the lackluster holiday spending is another sign the economy continues to sputter, said Chris Christopher, an economist at the Lexington forecasting firm IHS Global Insight.

“We are no way in a consumer-led recovery,” he said. “We’re just sort of holding on the best we can.”

Ray Green, a retired architect from St. Augustine, Fla., was shopping Wednesday at South Shore Plaza in Braintree while visiting family here. He said his continued concerns about the economy kept him from spending as much as usual on holiday gifts this year.

“We got really railed with the recession and the markets,” Green said. “It’s hard to find the extra money to buy things that people may not want.”

Some retailers, however, said they still expect a decent holiday season.

At CambridgeSide Galleria, foot and car traffic were up 3 to 5 percent in December, compared with December 2011, said Issie Shait, the mall’s general manager. At the Watertown Target, store manager Joe Moylan said sales were slightly better than last year’s. At South Shore Plaza, director of marketing Vicki Bartkiewicz said she also expects an increase from last year.

“It seems like we’ve been busy all season,” she said.

Easton resident Jeanne Behen, who was shopping at South Shore Plaza, said she spent about $2,500 on gifts this year.

“The kids are getting older; they want some bigger things like iPads, 32-inch TVs, and then a leather chair to go with it,” said Behen, 48.

While traditional stores were hoping for more shoppers like Behen, online retailers appear headed for another strong year. Holiday online retail sales are projected to increase 17 percent over 2011’s sales, following a 16 percent increase from 2010, according to IHS Global Insight.

A recent report by Chase Holiday Pulse, a publication of credit card processor Chase Paymentech, estimated that national holiday online sales were up 15.2 percent over last season’s. Online purchases still represent a small share of retail sales; between July and September, e-commerce sales accounted for about 5 percent of all retail trade, according to IHS Global Insight.

Laura Finaldi can be reached at laura.finaldi@globe.com. Follow her on Twitter
@lauraefinaldi.
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