JEFFREY BROWN: Retailers had high hopes for business this Christmas Eve. The season could turn out to be the best in several years, or even better. Shoppers flooded stores and malls across the country with time running out.
DIRETHEA CUMMINGS, Christmas Shopper: I am shopping for everybody. I know it's Christmas Eve and I waited until the last minute.
JEFFREY BROWN: For store managers, it was a welcome sight.
KURT KISSENBERGER, Store Manager Brookstone: Everyone's been coming around last minute. We still have a lot of items, but we're to going run out of things really fast.
JEFFREY BROWN: The National Retail Federation predicted seasonal business would top $451 billion, up more than 3 percent from last year. A big finish in the week after Christmas could push that total past the all-time record set in 2007.
DAVID WITEBSKY, Christmas Shopper: Things are little bit better for us this year, the past two years I would say were a little more touch and go.
AIMEE MEHERHOMJI, Christmas Shopper: There seems to be a lot more energy this year, too, just in malls, when you go shopping, a lot more people. So it kind of makes you think that things might be getting better.
JEFFREY BROWN: Online gifts vending was up 15 percent from a year ago. Some chains, like Best Buy, allowed shoppers to order online as late as this afternoon, and then pick up merchandise at the store by closing time tonight.
CHARLES WILLIAMS, Sales Manager, Best Buy: I believe around about 5, 6 it's going to be very, very busy. People are going to be kicking the doors to try to get that last-minute product.
JEFFREY BROWN: Even with healthy holiday sales, other indicators this week raised questions about the state of the economy. The number of people filing for jobless benefits was down to 420,000, suggesting fewer layoffs. But the figure would need to drop below 375,000 consistently to signal real improvement. And the housing market remained a drag on the economy, with new home sales in November among the weakest in decades. Still, for today at least, American consumers brought some Christmas cheer to their loved ones and to a national economy much in need of good news.
For more we're joined by Dana Telsey. She heads a company that tracks the retail industry. Dana, where is the retail action this season? What sectors are the hottest?
DANA TELSEY, CEO, Telsey Advisory Group: Happy holidays, Jeff. The sectors that are the hottest, certainly luxury goods doing very well. Footwear is doing very well. And anyone who wants an iPad that certainly seem to be the gift of choice this holiday season.
JEFFREY BROWN: Now, how much is due to big discounts and sales? How much are we seeing of that? What impact would that have, might that have, on retailers' profits?
DANA TELSEY: I think that the discounts that we're seeing out there, they're planned. One of the things that's changing for the holiday season overall is retailers are planning with promotions, buy one, get one, 30 percent off the whole store for a limited time period. It is in retailers game plans. I think the holiday season was a solid one for most of the retailers this year.
JEFFREY BROWN: What about things like some retailers were offering free shipping. How aggressive did retailers feel they had to be this year, as opposed especially to the last couple of years we've seen?
DANA TELSEY: I think one of the things is they don't have as much inventory this year as they have had in seasons past. There are certainly more high-ticket items that are selling through. And in terms of their profits I think we'll see a good fourth quarter, certainly January will tell the tale. In terms of online, still online is a small portion of overall retail sales, but it picks up for the holiday season. They felt they had to be promotional but not overly promotional.
JEFFREY BROWN: Now we, of course, like everyone have been doing so many stories about the weak economy, the bad unemployment. How do you square that with what we're seeing in the retail season? Also given what you are saying to us are the key areas for what people are buying?
DANA TELSEY: I think one of the things is the numbers aren't getting worse. The volatility and the instability that we saw over the past two years is changed in 2010, heading into 2011. We're beginning to see some signs of recovery. And the words, "it feels better" is out there. With unemployment for college-educated consumers at around 5 percent, you are seeing a comfort factor to consumers wanting to spend again. Certainly at the low end they're watching very carefully and that's why we're seeing some of the discounters and lower price retailers being careful about average transactions and also average dollar value.
JEFFREY BROWN: Before I let you go, I read that most of the last-minute shoppers, the procrastinators, are men. All the stores know that and they push the things for men, or the last minute jewelry gifts up to the
front of the store, is that correct?
DANA TELSEY: I've seen that, too, hopefully that will help our mid-single digit forecast come in a little bit better this holiday season.
JEFFREY BROWN: Dana Telsey, thanks so much.
DANA TELSEY: Thank you.