It’s shopping time for mass marketer

NEW YORK, Jan 4: The world’s largest retailer said in a statement yesterday that its US same-store sales at outlets open a year or more are likely to have increased 3% in December. Wal-Mart Stores indicated that it witnessed higher-than-expected sales of food and general merchandise in the post-Christmas week last year. The company had previously forecasted its same-store sales growth at 1%-3% for December 2004, after posting 0.7% growth for the previous month. Wal-Mart Stores’ share price appreciated 2%, after the company said that its December sales are likely to be at the top end of its guidance. The company is scheduled to report its final sales results for the past month on Thursday this week.

Mass market retailers like Wal-Mart, Kmart, Sears, Bloomingdales, etc. have seen their cash registers ringing a merry tune this holiday season.

Wal-Mart’s report injected a fresh bit of enthusiasm into the industry. Kmart which had been anxious about its year-over-year decline in sales, were pleased to see that it moderated to 4.6 percent in November and December. In the July-September quarter, Kmart had seen a huge drop of 12 percent in sales.

When contacted for a report, Wal-Mart officials said they were jubilant at the new peak in sales. They credited this growth to gift card sales which brought in the holiday shoppers at the year-end. Consumers came in to redeem their Christmas gift cards and sparked off the end-of-the-month rally. Gift card sales can only be recorded after consumers use them to purchase items in the store. Such gift cards are popular because they allow shoppers to make quick buys and save time as well.

A marketing executive at Bloomingdales said that they had seen “double-digit growth in cards sales in four years�? confirming the huge popularity of gift cards.

The other strategy which paid off with this spurt in sales was the aggressive price-slashing on certain items. In complete reversal to their earlier policy of ‘everyday low prices’ Wal-Mart had this time announced slashed prices, mainly on electronics like digital cameras, DVD players, printers, etc. Wal-Mart management was particularly happy that they had changed their policy because their usual prices policy had earlier failed to bring in the shoppers during Thanksgiving weekend.

December 26th was perhaps the best day for all mass market retailers across the spectrum of mid-to-low end sales. The festive spurt in sales spared luxury stores like Neiman Marcus.

“It’s a good sign for the broader market, which still lagged the up market but probably did better than some thought,” said Frank Badillo, an economist with Retail Forward. He said a late-year drop in oil prices from October’s 21-year highs, along with an improved job market, nudged more consumers into stores during December.