What’s one way to get reluctant shoppers back into the stores? Give them a sales tax holiday — or two or three.

That’s what the National Retail Federation is urging the government to consider as part of the economic stimulus plan being debated in Washington.

“We think what this can do is to help consumers psychologically get back into the stores,” said Rachelle Bernstein, NRF vice president and tax counsel, on a call with reporters. “We are hopeful that with a national sales tax holiday, which will get a lot of attention, that it might be something to help make the consumer feel good again.” 

The NRF outlined its sales tax idea in December in a letter sent to the incoming Obama administration. The trade group proposed that tax holidays be held on a national level in March, July and October 2009, each lasting 10 days. By temporarily lifting the sales tax for the three 10-day periods, the NRF said consumers could save nearly $20 billion. 

The NRF returned to touting the idea on Tuesday, the same day it forecast that retail sales will fall 0.5 percent this year–the first decline predicted since it began issuing such forecasts in 1995. The NRF said a large part of the forecast hinges on the government taking swift action to implement a stimulus plan.

In order to garner support among U.S. states for so many tax holidays, the trade group is suggesting the federal government reimburse lost revenue to the 45 states that charge sales taxes.

While state sales tax rates range from 2.9 percent to 7.25 percent, providing consumers a break from paying that tax seems to entice them to spend more than usual.

“Sales tax holidays really bring a great boost to spending during the holiday period,” Bernstein said. ”Some retailers report to us that they may see a spike in spending as high as 35 to 45 percent over what it would otherwise be during a holiday period.”

(Photo\Reuters)

The terrible U.S. retail sales  racked up in December -- called a "horror show" by ING -- were all the more gruesome because of the sales on offer to customers in the run up to Christmas. Shops weren't exactly giving things away, but their generosity knew few bounds.

Consider the experience of one visitor to a heaving handbag department in a Maryland Macy's.
 
    Customer: "I would like to buy this handbag please. Oh dear, it appears to be the only one that is not on sale."
    Salesman: "So it is. Tell you what, sir, I'll give you 15 percent off anyway."

Happy customer, happy new handbag recipient, unhappy sales figures.

Florsheim mens shoes are reasonably classy. They were imortalised, for example, by snappily dressed Jack Nicholson in Roman Polanski's "Chinatown". He was rather distressed, film buffs will recall, by what a flood drainage canal did to them.

So it was something of a sign of the times last week that a visitor to a normally genteel Florsheim shoe shop in a Maryland mall got the hard sell from two salesman. Simply popping in to ask a question, our hero was essentially told -- firmly -- that he could not afford to leave without purchasing some footwear. The price was right, he was told.

No shoes were purchased, as it happens, but the pitch was nonetheless enlightening as a sign of desperation. The mall was relatively empty, despite cut down sales at nearly every shop. Very few people were buying, judging by the shopping bags. Sales staff everywhere looked pretty lonely.

Purely subjectively, but there were no signs at this particular mall of a seasonal spurt to spending in the world's leading economy.

Black Friday has come and gone but what on earth happened at the cash registers over the Thanksgiving weekend? The data is trickling in, and so are the early critiques. (See our previous blogs: Treat Black Friday reports cautiously and Black Friday data spurs more questions than answers)

Here is a break down of the latest reports and what data is still to come:

National Retail Federation:

According its 2008 Black Friday Weekend survey, conducted by BIGresearch and published on Sunday, the NRF said more than 172 million shoppers visited stores and websites over Black Friday weekend (which includes Thursday, Friday, Saturday and projections for Sunday), up from 147 million shoppers last year. 

Shoppers spent an average of $372.57 this weekend, up 7.2 percent over last year’s $347.55. Total spending reached an estimated $41.0 billion, up from $34.6 billion a year ago.

The results came from a survey that polled 3,370 consumers from Nov. 27-29. The consumer poll has a margin of error of plus or minus 1.7 percent.

ShopperTrak: 

ShopperTrak RCT’s National Retail Sales Estimate found sales on Black Friday and Saturday rose 1.9 percent from 2007 – with each day posting total sales of $10.6 billion and $6.0 billion, respectively.

It said Saturday sales fell 0.8 percent compared with last year as most Black Friday promotions ended.  Sales on Saturday last year rose 5.4 percent over 2006, with $6.1 billion spent that day.   

“At this point, we anticipate sales levels will continue to slow this week as consumers will remain home, looking for additional holiday sales toward the end of the shortened 2008 season,” said Bill Martin, co-founder of ShopperTrak, in a statement on Monday.

ShopperTrak’s results are derived from statistics from the Commerce Department on sales of items like apparel, furniture, and electronics, combined with data it tracks on shopper traffic in stores.

SpendingPulse:

On Monday, SpendingPulse, a data service provided by MasterCard Advisors, said sales at U.S. specialty apparel retailers rose 1.6 percent on Friday and Saturday from a year earlier, but sales at electronics specialty retailers fell 14.3 percent. Luxury retailers saw a 2.4 percent increase,  while e-commerce sales rose 11.8 percent, it said. 

“We definitely think there was some pent-up demand that came to the front lines on Black Friday,” said SpendingPulse’s Michael McNamara. “Major discounting obviously attracted that.” 

SpendingPulse is a macroeconomic indicator that estimates U.S. retail sales across all payment forms, including cash and checks.

Data to come:

Dec. 3: SpendingPulse will release its full report on November monthly sales.

Dec. 3: ShopperTrak will release its complete report for Friday, Saturday and Sunday, in addition to sales and traffic data for the week ending Nov. 29.

Dec. 4: Major retail chains, like Wal-Mart, Gap and Kohl’s, will release their November monthly sales figures and are expected to comment on the Black Friday weekend.

(Photo\Reuters)

With retailers worried over the prospects for the holiday season (The Commerce Department said on Friday that retail sales slumped 2.8 percent in October — the largest decline since the department’s current methodology was adopted in 1992), they are expanding their definition of friends and family.

While “Friend & Family” sales used to be special events actually reserved for the friends and family members of a retailer’s employees, today it takes little more than an e-mail address to be considered a retailer’s friend.

Right now, Gap (seen in picture above) is touting its “Friend and Family” sale. The event began yesterday and offers shoppers 30 percent off in its Gap, Gap Outlet, Banana Republic, Banana Republic Factory Stores, and Old Navy stores. The sale ends Nov 16.

Meanwhile, Restoration Hardware is also holding a “Friends and Family Event” offering 20 percent off everything from Nov 13-16. Soma Intimates by Chico’s is touting 25 percent off “absolutely everything” for its friends and family this weekend.

Not to be left out, Macy’s is also trying to grab shoppers’ dollars with another special sale. In an e-mail message on Friday sent by Kent Anderson, the president of Macys.com, the retailer is offering e-mail subscribers an extra 20 percent off their next macys.com order.

“I know that choosing where to shop for what you need can be difficult, and I want you to know how much we appreciate your business,” the e-mail states.

But will these sales draw you into the stores this weekend? Or are you waiting until Black Friday to start your holiday shopping?

(Photo: Reuters)

Check out the bah-humbug signs emerging for the upcoming holidays.

The impending U.S. holiday shopping season is expected to be a weak one, but the debate is coming down to whether it could end up as one of the worst on record, as consumers show an increasing reluctance to spend.

Government data released on Friday showed consumers continue to put the brakes on spending. Sales at U.S. retail stores fell for a second straight month, with sales of clothing and electronics, which typically see high demand for back-to-school, were weaker in August than July.

On Tuesday, Deloitte forecast holiday retail sales to rise 2.5 percent to 3 percent for the November to January period, less than last year’s 3.4 percent increase and potentially one of the smallest gains since a 2 percent rise in the holiday season of 1991, when the nation had recently emerged from a recession.

On Wednesday,  a Reuters/Zogby survey showed that more than 44 percent of respondents expect to spend either a little less or a lot less on gifts this year than in 2007. Forty-six percent said they would spend about the same and just over 7 percent said they would shell out more.

“This a staggeringly bad number,” said pollster John Zogby, referring to the number of people who said they would spend the same amount on gifts this year.

“You’re still going to have people standing in line at three in the morning at Wal-Mart, but the lines may be thinner this year” on Black Friday, he said.

Also in the basket:

Darden quarterly profit falls on weak traffic

General Mills profit tops Wall Street view

(Photo: Reuters)

Check out how international sales and the weak dollar continue to lift quarterly results at U.S. companies.

Second-quarter profit at cosmetics firm Avon Products Inc more than doubled, as demand in Latin America and other overseas markets more than made up for sagging U. S. results.

Office Depot posted a 6 percent drop in North American retail sales, but a 13 percent rise in international sales during in its most recent quarter.

Still, investors are wondering when and if the United States’ economic malaise will spread to markets like Europe, Asia and Latin America.

Some cracks are already showing. Britain’s stressed housing market is putting pressure on consumer spending and Spain has reported a plunge in June retail sales amid a severe economic slowdown.

Also in the basket:

Los Angeles City Council passes fast-food ban

Oil slide, US glimmers of hope boost stocks

Jones Apparel 2nd-qtr profit tops estimates

(Photo: REUTERS/Jo Yong-Hak)

Check out the quarterly results at Walgreen, one of the largest U.S. drugstore operators.

The company posted a 2 percent increase in quarterly profit, amid a weak U.S. economy and slowing growth in sales of prescription drugs —  in the reported quarter, Zyrtec was switched to over-the-counter status.

And a slower-than-usual flu season — (good for you and me) – wasn’t so good for Walgreen. The company also pointed to the milder flu period for a slowdown in prescription drug sales volume in the quarter.

The company said it is on track to beat its goal of opening 550 new drugstores this year — and perhaps even come to the rescue of cash-strapped shoppers in the process.

“We’re adding neighborhood locations for today’s customer who is searching for value and struggling with high gas prices,” President Greg Wasson said in a statement on Monday.

As of May 31, the company operated 6,727 store locations in 49 states, but will be in all 50 states when it opens its first Alaska stores in 2009.

Also in the basket:

Bunge to buy Corn Products for $4.4 billion

Costco plans Australia foray to challenge duopoly

Busch family member backs ’strong’ Anheuser Busch

Jones Apparel takes stake in Asian partner

(Photo: Reuters)

The U.S. government is currently putting $100 billion into consumers’ hands in the form of tax rebates, hoping the fresh cash will stave off a recession.

It’s a plan similar to the once the government followed in 2001, except at that point, the economy was already in a recession.

Back then, the National Bureau of Economic Research said the U.S.  economy entered a recession in March 2001. To get the economy out of its funk, the government passed a stimulus package and mailed out rebate checks over a ten-week period from late July to the end of September 2001, according to research conducted by Thomson Reuters.

When looking at the monthly year-over-year changes, U.S. retail sales started slumping in the beginning of 2001 and reached their lowest level in September 2001, according to the research report. The Thomson Reuters Same Store Sales Index registered a rise of just 0.8 percent in September 2001, but then began to bounce back once the rebate checks were mailed out, with October notching a 1.6 percent gain.

“When comparing the sectors within our retail universe, we find that the discount sector performed the best during the 2001 recession and remained within the 3 percent - 6 percent growth range,” the Thomson Reuters report states. “It registered its strongest same store sales result ever of 9.5 percent in February 2002.”

The report said similar trends are being repeated now as middle class consumers cut back on spending and head to discount stores.

“In 2001, Wal-Mart beat Target’s same store sales results 11 out of 12 months. Today, we’re witnessing a similar trend as Wal-Mart has smashed Target’s comps over the last six months,” the report stated.

During the 2001 economic slowdown, the apparel sector performed the worst and posted its weakest comp ever of -9.5 percent in September 2001, the research shows. It also said the teen apparel group and department stores underperformed and posted sluggish comps during the period leading up to September 2001, but were able to bounce back shortly after.

“If past behavior is a good indicator of future behavior, we are likely to continue to see an increase in consumer spending in the short-term while the 2008 rebate checks are distributed,” the report states. “This in return could help improve the overall economy since consumer spending accounts for about 2/3 of GDP. The discount group is expected to post a 3.1 percent comp, but analysts continue to look for an even stronger 3.5 percent result excluding Wal-Mart.”

(Photo: Reuters)

Check out the loss of more retail jobs. 

Another 27,000 retail jobs disappeared in May, according to the U.S. government’s monthly employment report. That makes 152,000 retail jobs eliminated since the beginning of the year.
 
Overall, nonfarm payrolls fell by 49,000. But even more worrisome for the economy and for retailers could be the jump in the unemployment rate to 5.5 percent. That half-point jump was the largest such move in 22 years and brought the unemployment rate to its highest level in 3-1/2 years.
 
Retailer’s May sales reports yesterday were mostly better than expected, causing some analysts to think they could signal the beginning of a consumer turnaround.
 
But others said it just showed a blip in spending that was caused by the tax rebate checks consumers have begun to receive. 
 
Economic concerns could still linger after all that stimulus money is gone, they say, and things could get worse if consumers, already hit by $4-a-gallon gasoline, soaring food prices and falling home values really start to worry about their jobs.

Wonder how a half-point jump in the unemployment number plays into that?
 
Meanwhile, to take your mind of the jobs report, there’s always the company pep rally that masquerades as the Wal-Mart annual meeting. The world’s-largest retailer flies in employees from all around the world to help pack the basketball arena at the University of Arkansas, where stars entertain the crowd (this year’s acts include Miley Cyrus), everybody does the Wal-Mart cheer, and, oh yeah, shareholders get to ask questions.
 
Also in the basket:
 
New Wal-Mart director may herald changing of the guard (Wall Street Journal, subscription required)
 
Target grows makeup artist brands, adds testers (WWD)

 (Photos: Reuters)