WASHINGTON (AFP) — US retailers faced one of the worst holiday shopping seasons in years as a new poll showed Friday that sales during the Christmas-New Year period plunged amid a prolonged recession.
Total retail sales dropped by up to eight percent during the traditional November-December shopping period even after retailers slashed prices to woo bargain hunters, the MasterCard Inc.'s SpendingPulse unit said in a preliminary survey report.
"A difficult economic environment combined with unfavorable weather during the last week of shopping made 2008 one of the most challenging holiday shopping seasons in decades," said Michael McNamara, vice president of research and analysis for SpendingPulse.
The holiday season is seen as a make-or-break period for many retailers and a key for the struggling US economy, which relies on consumer spending for 70 percent of activity.
The season has witnessed bankruptcy for big consumer electronics seller Circuit City, which is reorganizing, as well as KB Toys, which is liquidating and closing more than 400 stores.
McNamara said total retail sales were down in the 5.5 to eight percent range for November and December as Americans cut spending amid job losses and a tight squeeze on incomes and credit.
The 40 percent drop in the price of gasoline compared to December 2007 accounted for almost half of the decline posted in the latest retail survey, which tracked retail and service sales nationally.
Excluding gasoline, total sales were down two to four percent this holiday season compared to the same period in 2007, it said.
The usually hot apparel sector was among the worst hit despite huge discounts.
Total apparel sales declines stabilized in the 19 to 21 percent range over the same period last year, only slightly higher than the 19.5 percent year-to-year decline through the first week in December, and the 19 percent decline in the first half of November, the survey said.
"Clothing really had a tough season starting back in fall, back in August, September and October, the apparel business just fell out of the bottom," retail analyst Marshal Cohen of the NDP Group told the local CBS News network.
"There's nothing new and exciting. You can wear a short skirt or a long shirt. You can wear black with another black outfit, and people are just compiling, so wardrobing has really been going on for awhile," he said.
The popular electronics and appliance category also suffered, facing declines of more than 26 percent against 2007.
"Sales above 1,000 dollars have been a consistent drag on this sector throughout the season," observed McNamara.
Luxury sales, another high-ticket sector, showed the largest year-over-year declines, with sales down by more than 34 percent over last year.
"Consumers are suffering from a crisis of confidence and are not spending. And when they are not spending it has an impact on the entire economy," Scott Krugman of the National Retail Federation said earlier in the week.
But there were a few signs of "relative strength," McNamara said.
Sectors that sold food, such as grocery and general merchandise stores and some sectors of the restaurant sector, helped keep total declines in the single digit range.
And sales through the Internet also remained comparatively healthy, with overall e-commerce sales declining only 2.3 percent compared to the 2007 holiday season.
Internet retailer Amazon.com reported its best holiday season ever in 2008, saying it sold more than 6.3 million items worldwide on its peak day, December 15, or the equivalent of "a record-breaking 72.9 items per second."
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