Sales Increase in 2007: Retailers Still Not Happy

Dennis Faas's picture

Although retailers reported an increase in sales this past holiday season, they're not particularly happy about it. Many analysts are startled that U.S. spenders didn't match an expected sales increase pegged at 4.5 per cent.

According to major credit card company MasterCard, Americans spent more money this holiday season than last year, a surprising fact given a relatively stagnant U.S. dollar and more broadly, the U.S. economy. MasterCard finds that retailers experienced a 3.6 per cent rise in sales in 2007 over 2006.

Earlier in the shopping season, most researchers pegged the holidays to "grow at the slowest rate" in the last five years, primarily because of an American economy mired in a housing slump and higher than average prices for both food and gas. Still, the 4.5 per cent plateau seemed reasonable to most market analysts.

So, what did Santa have in his bag this year?

According to market research firm SpendingPulse, specialty clothing chains like the Gap, Aeropostale Inc, and Urban Outfitters Inc saw an average sales increase of 1.4 per cent in the last year (measuring the period from Thanksgiving to 11:59pm on December 24th).

Even more surprising is who we're buying that clothing for. According to SpendingPulse, sales of men's apparel rose 2.3 per cent, while we all spent less time perusing women's clothing (which fell 2.4 per cent). (Source:

The gender difference may have something to do with electronics. Sales in this market, including Apple's popular line of iPod MP3 players, the iPhone, and laptop and desktop computers collectively rose 2.7 per cent. Given the iPhone's popularity this year -- based on its appeal as a communicator and media player -- there's reason to believe women are attracted more than ever to techie devices.  Undoubtedly, the Nintendo Wii and popular video games (including Guitar Hero 3 and Rock Band) also contributed to the buzz around electronics.

The really big winner this year has been the retail web site. Online stores experienced a 22.4 per cent gain over last year, evidence that Americans have grown weary of the mall mayhem. (Source:

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