Tree Sales, Mall Traffic Indicate Mixed Shopping Season

Sold-out Christmas tree lots and packed parking garages at malls during peak hours at first glance may suggest a merrier Christmas for retailers, but they are actually signs the holiday season may be a mixed one for U.S. retailers, analysts said.

While not as scientific as retail sales or inventory data, the sale of live Christmas trees and the number of cars searching for parking in shopping malls provide a window into consumer confidence and the prospects of retail activity for the crucial holiday shopping season.

Sales of apparel, electronics and toys have been lackluster for many stores, which are offering extended hours and more discounts to woo shoppers who may be feeling the sting of higher oil prices. But luxury goods, online shopping and gift card sales have seen solid growth.

Shoppers are spending on bigger trees — and often on more than just one — this year, suggesting that they are focusing on the trees rather than on the gifts under them, said Marshal Cohen, chief industry analyst at NPD Group (search).

"When Christmas spirit is at a low, the tree becomes more important," said Cohen, referring to tighter budgets this year. "The average American has 2.3 kids. That's a couple hundred dollars for more gifts versus $20 for a bigger (more decorated) tree."

And anecdotal evidence suggests tree sales are up this year, giving Robert Hudler, a Christmas Tree farm owner in North Carolina, one of his best years in the business.

While the supply of trees is up this year from the last three years when frost and other problems limited the availability of real trees, some lots sold out of trees more than a week before Christmas, Hudler said.

"Typically, we have trees to send to the shredder (at the end of the season,)" he added.

Officials at home center chains Home Depot Inc. (HD) and Lowe's Cos. Inc. (LOW) attribute much of the growth in real tree sales to customers buying multiple trees for several rooms in their homes or "theme" trees, with one for the kids, for example. Demand has also been fueled by shoppers looking for bigger trees because they have homes with higher ceilings.

Sales of freshly cut Christmas trees have lost ground to artificial trees in the last decade. But Cohen said artificial tree sales appeared to be a bit lighter than a year earlier, indicating that some consumers may have postponed the one-time investment of several hundred dollars and opted for cheaper real trees as they manage the holidays on a tighter budget.

Parking at regional shopping malls also offers a retail activity snapshot. When the parking traffic jams occur are most telling.

In Short Hills, N.J., parking lots reached 98 percent capacity over the weekend, up a bit from a year earlier, and local police reported a mile-long line of cars waiting to get into the lot Sunday afternoon, said a spokeswoman for Short Hills Mall owner Taubman Centers Inc. (search) .

Traffic at Taubman's Dolphin Mall in Miami rose 17 percent this past weekend from a year before based on car counts, while the International Plaza mall in Tampa was 100 percent full by early afternoon on the weekend, she added.

While parking lots have been crowded around peak hours, they have been emptier on weekdays and have filled up later on weekend mornings than in the past, suggesting shoppers are there for sales or for a handful of key items, not loads of them, Cohen said.

"Parking lots at the malls are very important (indicators), except they can be overvalued," said Kurt Barnard, veteran retail analyst and president of Barnard's Retail Consulting Group (search). "If a parking lot is jam-packed, you know there are lots of people in the mall. But it doesn't tell us price levels at which they are buying and it doesn't tell us if (shoppers) are planning to spend 20 percent less than last year."