The WSJ has quite the chart this morning, taken from MasterCard’s SpendingPulse data:
These are huge numbers, especially the 35% drop in luxury sales: it wasn’t all that long ago that the luxury segment was supposed to be immune from the plebeian woes of the economy as a whole.
The WSJ explains that the biggest fall of all was in jewelry:
Luxury goods, once considered immune from economic turmoil, were hardest hit, with sales falling 21.2%, compared with a jump of 7.5% a year ago, when the economy had just begun to sputter. Including jewelry sales, the luxury sector plunged by a whopping 34.5%.
A large chunk of that plunge in jewelry sales is surely non-luxury, mass-market jewelry, but still the numbers are much bigger than you could possibly explain away by pointing to bad weather or the reduced number of days between Thanksgiving and Christmas this year.
The most telling datapoint in the article, I think, is this one:
Shopper traffic fell 27% compared with the same time last year, while sales declined 5.3%, according to ShopperTrak RCT Corp., which tracks sales in retail outlets nationwide.
What this says to me is that shopping has moved from being a pleasurable activity — think mall-as-destination — to being an unpleasant chore. For many years, America’s retailers were successful in making people want to go shopping, even if they didn’t end up buying anything. Now, shopping is something to avoid where possible, and it’s interesting that Amazon — the shop for people who hate going shopping — managed another record year.
As a European, I retain a small measure of incomprehension when I look at America’s insatiable demand for stuff — demand which has been growing unsustainably until now. It’s still there, if you drop your prices enough:
Michelle Culang, 26, a doctoral student at City University of New York, stopped by Macy’s Herald Square store in Manhattan before Christmas because the store was having a big sale on pillows. "Once I saw the prices I bought more than I would have," said Ms. Culang, who spent $130 on a satin-sheet set and two extra-firm pillows for $29.99 each, marked down from $100.
And of course it’s very good news that the entire country hasn’t turned German overnight. But I do think that we’re seeing the beginning of a secular downshift in the percentage of the US economy accounted for by retail sales. That’s a good thing, in the long term, but it’s going to be a painful adjustment for the time being.