Retailers feeling rather Scrooged
January 17, 2009Retailers have a haunted look these days, but it’s not because of a visit from the Ghost of Christmas Past.
When the Dow Jones industrial average hovered above 10,000 during most of the decade, and homeowners felt flush with equity as home prices soared, holiday shoppers spent freely on the latest hot electronics gadget or highbrow apparel brand.
Now, as shopping malls and retail stores desperately gear up for a burst of post-holiday clearance sales – tomorrow is being billed as the second Black Friday – it appears certain that the $300 billion
Consumer spending fell for a fifth straight month in November – the longest weak stretch in half a century – while incomes fell and layoffs mounted, government data showed yesterday. The climate is expected to get worse before it gets better.
And economists keep lowering their holiday predictions. Michael Niemira, chief economist for the International Council of Shopping Centers, now expects sales at established stores for November and December to fall 1.5 percent to 2 percent from the year before – making it the weakest holiday season since at least 1969, when the index began.
“It’s been pretty miserable,” said George Whalin, a retail analyst with Carlsbad-based Retail Management Consultants. “Maybe Wal-Mart and Costco and a few little niche retailers here and there will do well, but it’s been pretty much what people expected. Consumers just aren’t spending as much as they did in the past.”
As a result, one of the big worries for retailers is what to do with the mounds of items they still have to sell.
In Christmases past, stores could rely on a surge before and after the holiday to help save the season. But this year, it was virtually over before it began as stores had to slash prices on holiday goods as soon as they hit the shelves.
Stores had a good start, fueled by bargain buying, but sales soon flattened. For the last weekend before Christmas, total retail sales nationwide fell 5 percent from a year earlier as winter storms kept people home, according to research firm ShopperTrak RCT.
Now many retailers are hoping the next few days, beginning tomorrow, won’t just be about returning merchandise. Once again, they’re offering deep discounts and “doorbuster” specials designed to entice bargain hunters and gift-card recipients for a final shopping splurge.
J.C. Penney, which is opening its doors at 5:30 a.m. tomorrow, is offering more than 100 doorbuster specials – twice as many as last year. They include apparel for as much as 60 percent off, 50 percent off electronics and 70 percent off jewelry.
Consumers can even sign up at jcp.com to get a free wake-up call from the department store on their mobile phone.
Toys “R” Us circulars in newspapers today are billing the day after Christmas as the biggest after-holiday sale, with deals that include race-car sets originally priced at $81.99 for $19.99.
Upscale retailer Neiman Marcus is offering online shoppers up to 40 percent off select items on its Web site, including UGG boots and
“These are real sales,” Whalin said. “Department stores like Neiman Marcus don’t mark things up to then mark them down, and they rarely mark down. So there will be good stuff to be had out there.”
Alexandra Kearney and daughter Alex, who were picking up last-minute gifts Christmas Eve at the Bloomingdale’s at
“The deals have been good,” said Kearney, a La Jolla resident. “Hopefully the deals will be better because they have to bring the spring merchandise in.”
Still, Whalin and other experts note that most consumers have yet to be swayed by discounts. If 70 percent off before Dec. 25 didn’t make people splurge, will even-bigger deals afterward do the trick?
George Belch, a marketing professor and consumer-behavior expert at
“There has been a fundamental shift in consumer behavior,” Belch said. “People look at these things and say: ‘Do I really need it? I may want it, but do I need it?’
“At the end of the day, I don’t see post-holiday sales pulling retailers out of what has been a pretty dismal retail season.”
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