Retailers across Massachusetts blamed distractions from the fiscal cliff standoff, fierce competition from online rivals, and mild weather for delivering a holiday season that fell short of expectations.
Sales at local merchants in November and December grew by a modest 2.76 percent compared with the previous year — below the 3.5 percent increase projected by the Retailers Association of Massachusetts. Industry analysts had expected a bigger boost given relatively stable employment figures, growing consumer confidence, and an extra weekend between Thanksgiving and Christmas in 2012.
“It’s a little bit disappointing,” said Jon Hurst, president of the Retailers Association of Massachusetts, which has been polling its 3,500 members on the holiday season since the beginning of the month. “The calendar was so favorable, we were hoping for a little more.”
The tepid results are in line with national trends. ShopperTrak, a retail technology company, reported Wednesday that initial data showed US consumers increased spending by 2.5 percent during November and December, compared with the same stretch in 2011. ShopperTrak had predicted in September that sales would rise by 3.3 percent — and then lowered its forecast in late December because of heavily discounted merchandise and the impact of Hurricane Sandy.
“The holiday season didn’t quite meet my expectations,” said Bob Prestidge, who with his wife, Meghan, runs a cookware store in Concord. “It was just marginally better.”
Prestidge said the Saturday before Christmas marked his best sales day ever, but he ended up slightly below his anticipated volume following quieter weekdays and growing competition from online and big-box merchants.
The final two months of the year are typically the busiest for retailers. Some count on generating up to 40 percent of their annual sales during that period.
Nancy Pratt, of the House of Wheels in Auburn, said 2012 was the worst holiday season of the past six years, with sales down about 30 percent. December is usually the best month for the after-market auto accessories store, but Pratt said shoppers were cautious about spending money.
“They were worried about the whole fiscal cliff, they were worried about taxes going up, and whether it might affect if they had a job,” Pratt said.
Massachusetts retailers’ revenues dropped noticeably in November, when sales tax collections totaled $412 million, down $14 million or 3.2 percent from the same period a year ago and $6 million below benchmark, according to the state Department of Revenue.
Ken Perkins, president of research firm Retail Metrics in Swampscott, said a variety of factors contributed to lower sales in Massachusetts: the migration of revenues online and away from traditional stores; warmer than normal temperatures all the way up to the week before Christmas dampened sales of outerwear, resulting in steep markdowns; the threat of higher taxes stemming from fiscal cliff negotiations; and the state’s unemployment figures slowly inching up since bottoming in June at 6 percent.
This past season, Marjorie Mannix, a day trader who lives in Norwell, said she cut her holiday budget by $500 to $1,500, resulting in fewer gifts for her three children.
“I spent less this year because of the economy. You know, this fiscal cliff was looming and I had no idea how it was going to affect me so I had to make a conscious effort to spend less on each kid,” Mannix said.
Antonio Gunasekera of Dorchester said he spent about $400 more on presents in 2012, but he made sure to wait for Black Friday sales and used credit cards, rather than paying for everything all at once.
“I spent more this year because the cost of living is more this year,” Gunasekera said. “With everything being more expensive, like airfare or bus fare, holiday shopping is affected, too.”
Hurst, of the retailers association, noted that the minor growth for Massachusetts businesses still beat the national inflation rate, and came on top of a successful holiday season in 2011 when revenues rose 5 percent. He expects retail sales in the Commonwealth to increase another 2 to 3 percent in 2013.
“Projections are relatively conservative,” Hurst said. “We’re going to continue to see some caution from consumers.”
Erin Calvo-Bacci, who owns The Chocolate Truffle in Reading, said she expected a 12 percent boost at her shop given the strong sales before the holiday season. It ended up down 8 percent, and the candy shop turned a profit only because of the growth in its wholesale business and Calvo-Bacci’s decision in October to close a store in Winchester, which had lower sales and higher overhead.Continued...