Deeper discounts offered after weak holiday season
Vail, CO Colroado
NEW YORK ” Retailers opened earlier than ever on the day after Christmas on Wednesday and slashed prices with hopes of salvaging a holiday season that is falling short of already modest expectations.
Merchants are trying to lure post-Christmas bargain hunters and gift-card splurgers that could provide a much needed boost during this crucial period. Gift card sales, which have been growing in recent years, are not recorded until shoppers redeem them. Still, investors are growing more pessimistic about this shopping season, sending most retailers’ stocks down Wednesday. Macy’s Inc.’s shares fell more than 4.5 percent in afternoon.
“My son gave me gift cards for clothes, and I get up with the birds, so I figured I’d get the most with my money,” said Susan Depetris, who was loading pants and sweaters into a cart at Kohl’s in Medford, Mass. She didn’t plan on looking for gifts for anyone else. She had just one person on her mind while she shopped ” herself.
“I was the first one in the door, so it was nice,” said Shirley Vilhauer, of Bismarck, N.D., who was shopping at a local Kohl’s and spent less than $25 on ski pants for her grandson and a baby gift for her niece’s young son.
The International Council of Shopping Centers said Wednesday that same-store sales, or sales at stores opened at least a year during the November-December period, appear to be coming in just below already slim projections for a 2.5 percent gain, though it said that a post-Christmas buying bump could erase that shortfall. That contrasts to a more upbeat assessment from its chief economist Michael P. Niemira, following the weekend’s spending surge, who predicted that holiday sales could at least meet forecasts.
Target Corp. warned late Monday that its same-store sales might decline for December, while a broad gauge of consumer spending released by Mastercard Advisors, a division of the credit card company, which includes estimates for spending by check and cash, reported on Tuesday an increase of 3.6 percent from Thanksgiving to Christmas. That compared with a 6.6 percent gain in the year-ago period. The 2007 holiday figure is at the low end of its 3.5 percent to 4.5 percent range. Excluding gasoline and auto sales, that figure was 2.4 percent.
“The ingredients were not there for a blockbuster season,” said Michael McNamara, vice president, research and analysis of MasterCard Advisors. “And retailers in many respects got the most out of the season that they could based on the environment.”
Despite a strong start to the season, shoppers held out for deals through most of December amid a challenging economy. Higher gasoline prices, an escalating credit crisis and a housing slump made shoppers cautious, which has manifested itself in weakening sales growth throughout the year, McNamara said.
To spur business, stores rolled out discounts early and aggressively, raising concern about profits during this crucial period. The holiday season accounts for up to 30 percent of annual stores sales. For toy sellers, holiday business accounts for as much as 50 percent.
Retailers’ woes can be good new for shoppers, who are being bombarded with even more generous discounts in the after-Christmas period. Toys “R” Us Inc., which threw open its doors at 8 a.m. on Wednesday, two hours earlier than last year, offered 40 percent price cuts on all MP3 and iPod accessories. Macy’s Inc. marked down cashmere sweaters anywhere from 50 percent to 75 percent off, while Saks Fifth Avenue cut prices on fur coats by 40 percent to 60 percent.
In Lisbon, Conn., Maggie Challinor joined about 20 shoppers huddled for warmth in the vestibule of Kohl’s department store for a 6 a.m. opening. Challinor, of Norwich, Conn., planned to buy a coat with a Christmas gift card she received from her husband.
Gift cards helped the family keep to their Christmas budget, she said. “We spent less. We really watched for sales.”
Samantha Williams, with her bundled 7-week-old daughter, arrived early Wednesday at Kohl’s to exchange baby clothes. Waking early was better than fighting lines later, she said.
Barbara Gagne of Griswold, Conn., found a $55 blouse marked down to $11, which she bought after returning two pairs of pants.
“I’m here for the bargains,” she said.
Lili Leavell-Hayes of Indianapolis was shopping at the city’s Castleton Square Mall for “things that Santa did not deliver.”
For Leavell-Hayes, the discounts did not dig deep enough.
“I think they could be doing better,” she said.
The post-Christmas season has become more important with the increasing popularity of gift cards. According to the National Retail Federation, consumers were expected to spend a total of $26.3 billion in gift cards this holiday season, up 42 percent from $18.5 billion in 2005.
ShopperTrak RCT Corp. said that the week after Christmas accounts for about 16 percent of total holiday sales.
“This is going to be a more important chunk of business than most people realize,” said Scott Krugman, a spokesman at NRF.
Marshal Cohen, chief industry analyst at NPD Group Inc., a market research firm, agreed, noting that when the industry looks at the holiday results, they need to include January business.
“When we take a look at the results of this holiday retail season, it will be important to remember that the rules have changed and so should the way we read the success of the holiday,” Cohen said.
Associated Press Writers Susan Haigh, in Lisbon, Conn., Dale Wetzel in Bismarck, N.D. Deanna Martin in Indianapolis and Melissa Trujillo, in Boston, contributed to this report.
National Retail Federation: http://www.nrf.com