Wall Street’s bloodbath is coming just in time for Christmas. That means little holiday cheer this year, as office parties are slashed and shoppers skimp on gifts at the greatest rate in 17 years. Holiday sales for 2008 are expected to grow an anemic 1.5% from 2007, according to the latest projections from TNS Retail Forward, a market research firm that specializes in retail.
That would make the upcoming holiday shopping season the worst since 1991, a period when the economy was slowly emerging from a recession. Even the 2001 Christmas season, coming on the heels of the Sept. 11 attacks and a general slowdown that followed the bursting of the Internet bubble, saw a 2.2% gain in sales growth from the previous year. Holiday sales growth averaged 6.5% between 2003 and 2005, before slowing to 3.8% in 2006 and 2.7% in 2007, according to TNS.
If the company’s projection proves correct, growth will be nearly cut in half this year. And the signs for a weak season were around before the recent travails of the financial industry. August sales were slow (up 1.1% from last year) despite Labor Day falling on Sept. 1–meaning that all pre-Labor Day shopping took place in August.
“So that means September will be a disaster, too,” says Britt Beemer, president of America’s Research Group, pointing out that the month has no pre-Labor Day period this year to give it an early boost. Leading the spiral downward through December will be clothing and accessories, which TNS projects will fall 1.3% from last year.