Cheaper Gas Means Higher Sales

WAYNE, PA-It’s all about the weather. At least that’s what Planalytics Inc. believes when it comes to this year’s holiday shopping season.

The Wayne, PA company studies the impact that weather has on business performance. Company officials said declining gas prices, combined with milder weather at the start of the shopping season and colder than normal temperatures for the two weeks beginning Dec. 17, could favorably impact retail sales by as much as 5.5%.

“It looks like the picture is shaping up pretty well,” Senior Vice President Paul Walsh said in announcing the firm’s findings.

Walsh said the first two weeks of the holiday shopping season, which begins the day after Thanksgiving, should be good for electronics super centers, mass merchants and home centers as milder temperatures bring out shoppers. As the weather turns colder around Dec. 17, those retailers should be at a disadvantage as consumers began buying seasonal items at department and specialty apparel stores.

“It really is a tale of two seasons,” said Walsh. “The challenge for these retailers will be in pricing pressure as they move through those weeks.”

Yet despite that pressure, Walsh predicts that the end of the season will be good, even on days when the weather keeps consumers homebound as shoppers turn to the Internet to complete their holiday gift lists.

Spurring on increased consumer demand is a drop in gas prices that will free up more disposable cash as the year winds to a close, said Richard Hastings, vice president and senior research sector analyst with New York-based Bernard Sands LLC, a trade credit consulting and retailing industry research firm.

Hastings says that while the deterioration of the nation’s housing market poses “an ominous threat” to consumer spending during the holidays, that threat will be offset by about a 20% drop in gas price,s which could put about $25 billion in disposable dollars back into the economy, pushing retail holiday sales up by 5.5%.