Holiday Boom Seems to Skip Wal-Mart Stores

Wal-Mart's sales dropped a bit in November, the first monthly decline for the giant retailer in 10 years. But while Wal-Mart's sales seem to have flattened, other retailers are reporting robust holiday season business so far.

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The biggest retailer in the country is warning of disappointing holiday sales. Wal-Mart says sales at existing stores dropped in November for the first time in a decade. Sales in December are expected to grow only slightly. Other retailers are seeing mixed results. Meanwhile, the federal government reports a modest increase in consumer spending last month.

NPR's Scott Horsley reports.

SCOTT HORSLEY: Wal-Mart rattled the stock market earlier this week with its warning that cash registers were ringing a little more quietly in November. The company confirmed those numbers today and said it expects only a modest improvement in December.

Discount rival Target, on the other hand, saw its November sales increase by nearly six percent. That suggests consumers have not sworn off shopping, more are just choosing to spend their money somewhere other than Wal-Mart. President Ken Perkins at Retail Metrics in Massachusetts says disruptive renovations at hundreds of Wal-Mart stores may have kept some shoppers away.

Mr. KEN PERKINS (Retail Metrics): If you have a choice to maybe go to a Target or a Wal-Mart, and you know that the Wal-Mart's under remodeling and it's a little chaotic when you go in, you're probably going to head to the Target or to a Kohl's or to a JCPenney, you know, maybe instead.

HORSLEY: Perkins says the good news for Wal-Mart is that its renovations are now mostly behind it, but the discounter's effort to stock more stylish apparel, the way Target does, has not paid off as expected.

Mr. PERKINS: Yeah, I think their core consumer really was simply looking more for value in this space, and Wal-Mart is seen as, you know, the discount price leader. You know, it's not a place where typically you find synonymous with fashion.

HORSLEY: Financial planner Kate Dudley was shopping for basics today in Iowa City. Despite Wal-Mart's low prices, Dudley says, she comes to the store somewhat reluctantly.

Ms. KATE DUDLEY: Well, I've just, you know, I've seen some of the, you know, reports about how they're paying women less, and I've seen a lot of businesses close that can't compete, and just those kinds of issues.

HORSLEY: Wal-Mart is the target of a sex discrimination case in California. The company has denied any wrongdoing. Wal-Mart says its existing stores drew fewer customers in November, but the shoppers who did come in spent more money. Wal-Mart customers stocked up on electronics on the weekend after Thanksgiving, and the chain says DVDs and video games have been strong sellers all month

Items for the home, however, are not flying off the shelves. Chief economist Mike Niemira of the International Council of Shopping Centers says that's true at many stores as a result of the slowing housing market.

Mr. MIKE NIEMIRA (International Council of Shopping Centers): With weakness in home demand, there's less demand for new furniture, less demand for curtains and other household, durable items.

HORSLEY: The Commerce Department said today that consumer spending jumped by two tenths of one percent in October, the biggest increase in three months. Many forecasters expect a small jump in holiday spending this year, although not as big as last year's. Niemira says with the growing popularity of gift cards, the holiday season now extends well into the new year. Most stores don't report gift card sales until the cards are cashed in.

Mr. NIEMIRA: So consumers are out there buying these gift cards and shopping, but it doesn't necessarily show up as dollars spent until January and beyond, really.

HORSLEY: Although in the past, gift cards have often been a last minute item, many stores reported strong sales of the cards, even on the Friday after Thanksgiving.

Scott Horsley, NPR News.

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