Returns show Christmas season not terribly bright for Arizona retailers - East Valley Tribune: Business

Returns show Christmas season not terribly bright for Arizona retailers

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Posted: Friday, February 17, 2012 4:59 pm

It appears to have been a lackluster Christmas for Arizona retailers.

New figures from the state Department of Revenue show total retail sales in December of $5.16 billion. That is only a 3.7 percent increase over the same period a year earlier.

And it is nearly 8 percent less than Christmas 2007.

"I would call these mildly disappointing," said Dennis Hoffman, an economics professor at the W.P. Carey School of Business at Arizona State University. Hoffman had predicted a 5-plus percent increase in year-over-year sales.

In fact, that 3.7 percent number itself may be artificially high, bolstered by large increases in sales of automobiles and home furnishings. In the category of general merchandise, which would include the kind of department stores where Arizonans might traditionally shop, that year-over-year increase was just 1.9 percent.

Hoffman said it may be that, despite improved consumer confidence and a drop in unemployment rates, Arizonans just were not quite as ready to part with their money. But he also said some other factors might be at play.

One relates to how desperate stores were to draw in shoppers.

He said that December sales figure is simply a function of price times quantity.

"Suppose the stores did get pretty aggressive in terms of cost-cutting and incentives and sales," Hoffman said. He said that would benefit consumers.

"Maybe (shoppers) did buy a lot of product," he continued. "But they were able to shop wisely, and they got some really bargain-basement prices."

Hoffman said there's another possible explanation: Consumers did, in fact, sharply increase their holiday spending -- but not at Arizona retailers. Instead, they were shopping by phone and online.

He said consumers are "inundated" with catalogs early in the season. And those retailers have increasingly offered not only free shipping but also risk-free free returns if the item isn't quite right.

"It's pretty convenient to do that shopping on a Sunday evening, head off to the computer with a cup of tea and do your holiday shopping really very efficiently," Hoffman said.

Hoffman did find some bright spots in the report, particularly in sales of cars and trucks which are up 9.3 percent from the same time last year. Even there, though, sales remain below what they were in December 2007.

The report does show a 6.2 percent year-over-year increase in spending at bars and restaurants. But hotel and motel receipts, an indication of tourism, are up by just 1.6 percent.

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