Consumers with gift-card laden wallets headed to chains from Macy's to Kohl's to American Eagle Outfitters last month, helping to extend the holiday shopping spirit into the new year.
According to a New York retail trade group that had predicted a 3 percent bump for the month,plastic money, combined with a motivational shot of winter weather, drove U.S. chain store sales up 3.7 percent in January.
Patrice Duker, spokeswoman for the International Council of Shopping Centers,said "The gift cards really did come through this year,if the trends continue to hold true, then January is going to continue to be an important month for retailers."
The chilly beginning of the year traditionally has been a slow time consigned to clearance sales and sparsely populated aisles, but the appeal of giving plastic to far-flung family and hard-to-shop-for friends has meant there's money to spend after Christmas.
Consumers bought $27.8 billion worth during the holiday shopping season, even more than the $24.8 billion predicted by the National Retail Federation and BIGresearch.
Accounting rules mean retailers cannot record gift cards as a sale until they are redeemed, so stores stepped up their promotions and brought in new merchandise to attract customers with gift cards burning a hole in their pockets.
Ms. Duker said "They realize that consumers have money to spend".
Eduardo Castro-Wright, president and chief executive officer of Wal-Mart U.S. said "Colder temperatures throughout the United States drove sales of cold weather-related items".
The chain posted an 8.6 percent increase in sales at stores that had been open at least a year, much better than the company's projections of a bump in the 1.5 percent to 3 percent range.
Federated Chairman Terry J. Lundgren credited both the gift cards and the weather with stimulating sales. So did officials at Kohl's, which posted an 8.7 percent increase in same-store sales for the month.Teen retailer American Eagle Outfitters added a January same-store sales increase of 17 percent to its recent string of strong months.
Judy Meehan, senior director of investor relations, noted in a recorded sales message that a combination of school breaks and gift card redemptions made the weeks right after the holidays the strongest of the month.
The International Council of Shopping Centers estimates 10 percent of gift cards are used the week after Christmas. That total rises to 40 percent in January. The remaining 60 percent tend to come in slowly throughout the year, if they're not lost in the back of the sock drawer
The retail trade group reported luxury stores did the best with an 11.2 percent increase, followed by drugstores at 8.8 percent and department stores at 6.7 percent. Apparel chain stores' sales rose 3.3 percent, followed by discount stores and wholesale clubs, which both posted gains of 2.6 percent.