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Weak Holiday Shopping Season Brings Little Cheer for Struggling Retailers

The holiday season was anything but merry for retailers this year; sales fell by double-digits in several categories, making this shopping season one of the worst in decades. An analyst examines the impact on the economy.

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  • MARGARET WARNER:

    It's been a year since the recession first took hold in the U.S., and its impact only seems to be growing in size and scope. Tonight we look at the latest fallout for both business and the states.

    First, a look at how retailers fared during this pivotal holiday shopping season. Jeffrey Brown has that story.

  • JEFFREY BROWN:

    And for that, I'm joined by Dana Telsey, a retail analyst and head of Telsey Advisory Group, a research and consulting firm in New York City.

    Well, Dana, I know hopes weren't too high, but it's turning out even worse than expected?

  • DANA TELSEY, Telsey Advisory Group:

    Yes, it was a very difficult season. It began on Black Friday with a heavy amount of markdowns. Those markdowns continued all the way through. And the only strength we really saw was the pickup in traffic right before Christmas Day.

  • JEFFREY BROWN:

    For some perspective here, how far in advance would retailers be doing their orders? I mean, would they have known how bad the economy was going to be? Or how far in advance do they have to plan for a season?

  • DANA TELSEY:

    Typically, retailers plan anywhere from six to nine months in advance in ordering their goods. As a result, they were all ordering merchandise for what seemed to be a better Christmas season.

    When the events of September and October began to unfold, whether it was the volatile stock market, the lack of access to credit, declining home values, and rising unemployment, it just really made it very challenging for the Christmas season and the only response from the retailers was, "Promote, promote, promote," in order that the shelves remain clean by the end of the holiday.

  • JEFFREY BROWN:

    Now, for more perspective, when I was looking at the number today in the drop, if you take out the gas prices, it was something like a drop of 2 to 2.5 percent in retail sales. Now that doesn't sound like a lot when you compare it to, you know, what we've been seeing in the stock market, for example.

    But I gather in the retail world any kind of drop at this season is bad, right?

  • DANA TELSEY:

    We haven't really had a holiday season sales decline. The lowest we've seen since 1985 was 0.5 percent gain in 2002. So given that this will probably be the first decline, it is of significance.