Retailers Pull Out the Stops : Christmas: With consumers keeping a tight hold on their wallets and doomsayers predicting weak sales, there will be plenty of promotions in stores this year.

Brooks Bros. boasted in a recent letter to credit card customers that it has shunned the “constant sales and markdowns” that “seem to be the rule” among other apparel retailers.

So is the company swearing off gimmicky sales promotions? Not a chance. Stuffed inside the same envelope was a card urging customers to come in for their complimentary 1991 pocket diaries.

“For the first time in my life, it’s a freebie if I go in!” roared Alan Millstein, publisher of the Fashion Network Report newsletter.

To move merchandise these days, it seems, you’ve got to have a gimmick. Many recession-wary consumers are curbing spending at the worst time for retailers: just as the Christmas shopping season, when many merchants make half of their annual profits, is arriving. When the season begins in earnest Friday, the day after Thanksgiving, retailers will see if the doomsayers’ predictions of a dismal holiday season are correct.

To whip up enthusiasm, many of the nation’s struggling stores and their competitors are bringing out new promotional tricks and dusting off old ones.

Sears, Roebuck & Co. has launched a “bonus club” that rewards frequent shoppers with discount certificates. Catalogue merchants, including children’s clothier Brights Creek, are issuing coupons for Continental Airlines ticket deals to customers who spend $50 or more.

Kmart is holding its first “One-Million-Dollar Giveaway” on Saturday and will present $100 in gift certificates to 10,000 sweepstakes winners across the country. “When you mention $1 million, you get people’s attention,” said Kmart spokeswoman Teri Kula.

Many consumers aren’t impressed.

“The odds are too great. I can’t be bothered,” said Phyllis Steeber, an insurance company customer service worker.

“If I want to play Lotto, I’ll go to 7-Eleven,” added Tracey Kettenring, a waitress from Granada Hills. “It’s just another gimmick to get me to come into the store, and I’m going to buy what I want to buy anyway.”

Tough competition is also forcing most big stores to continue offering price cuts and special holiday season sales. Besidespummeling profits, discounts have become so common that they are losing their allure.

As a result, many merchants are relying more on promotional ploys other than sales and markdowns to de-emphasize, disguise or supplement their sales and markdowns--at times, even at the risk of hurting their business in the long run.

“That’s how desperate they are to get traffic,” Millstein said.

The concern is justifiable. Even one of the more optimistic retail industry economists, Carl Steidtmann of the consulting firm Management Horizons, projects that fourth-quarter sales will rise only 0.5% from a year ago after subtracting inflation.

Profits, he predicts, will increase 20%. That’s a substantial improvement, but not enough to offset last year’s earnings decline of 54% or to prevent this from being the fourth weak Christmas in a row.

In 1989, profits were battered by price wars triggered by sluggish consumer spending and the desperation of many debt-burdened retailers to keep money flowing in. The markdowns proved self-destructive: Campeau Corp.’s giant department store empire filed for bankruptcy court protection in mid-January, and a host of other retailing collapses followed.

This year, analysts are worried about slumping Carter Hawley Hale Stores, parent of the Broadway-Southern California, and R. H. Macy & Co., owner of California’s Bullock’s and I. Magnin stores. Both are struggling under heavy junk bond debts.

What’s more, a few analysts believe that the retailing industry will make even less money this Christmas than a year ago, largely because of the apparent unraveling of the nation’s eight-year economic boom and the weak sales results in recent months. Last week the federal government reported that retail sales, excluding gasoline purchases, fell 0.1% in October from the month before.

Sales of expensive items such as furniture, jewelry and major appliances have been particularly weak and are expected to remain that way.

“People who come up with flat sales . . . will consider themselves very fortunate,” predicted Kurt Barnard, publisher of Retail Marketing Report.

Yet a few big retailers that have developed reputations for consistently good merchandise, service or prices are doing swimmingly. Thousands of shoppers jammed into the new Ikea furniture store in Burbank during its six-day grand opening this month. Gap Inc., the San Bruno-based clothier, on Thursday posted a 24% increase in its third-quarter sales.

Still, many shoppers are talking about buying fewer and cheaper gifts. The Chicago-based market research firm Leo J. Shapiro & Associates found in a survey conducted early last month that consumers are in a more tightfisted mood than in any Christmas season since the recession year of 1981.

“Ever since the Persian Gulf crisis, consumers have been terribly gun-shy about shopping,” said George Rosenbaum, the firm’s president.

For example, Chris Hong, who owns a pair of video rental shops with her husband, said she plans to cut her Christmas spending by 50% from a year ago. To save money, Hong and some of her friends have agreed not to exchange presents this year.

“The economy is going down, so we can’t make as much money as before,” she explained. In fact, Hong said she and her husband plan to close their faltering video stores and will try getting into another business.

Also common are people who say they will spend about the same--but no more--than they did on Christmas last year. “I buy for grandchildren,” said Steeber, the insurance office worker. “If I have money, I’m going to spend it.”

But, Steeber added, worries about the economy have persuaded her to put off buying a new car and making other purchases for herself.

Although consumer confidence has sunk lower than anyone expected, retailers knew months ago that this wouldn’t be a strong Christmas, so they have had time to prepare. To cut expenses, they slashed thousands of jobs.

And to avoid another year of money-losing close-out sales, many merchants started their Christmas marketing early and canceled merchandise orders to hold down inventories.

But now that the economy is slumping, inventories look bloated anyway. The result: For consumers, prices will be as low as they were last year, “but the selection will get worse,” said Robert M. Raiff, analyst with the investment firm C. J. Lawrence.

To gain a competitive edge, many retailers have resorted to gimmicks, giveaways and such traditional special events as concerts and tree-trimming parties. “The tougher times are, the more customers look for excitement,” explained Kenneth A. Macke, chairman and chief executive of Dayton Hudson Corp., parent of California’s Mervyn’s and Target stores.

Free gifts-with-purchases deals abound, particularly at cosmetics counters. Other stores offer purchase-with-purchase promotions, in which a shopper gets one item at a sharp discount for buying another at full price. In a similar promotion, Hallmark card shops are selling animal figurine Christmas ornaments for $2.95 only to customers who spend at least $5 on other merchandise.

Buy now, pay later programs, where finance charges on big-ticket goods such as appliances and televisions are deferred for months, are being offered at Sears, Mervyn’s and a legion of other stores.

Joint promotions are also being tried. Such retailers as Montgomery Ward, Toys R Us, Kmart, the sister Musicland and Sam Goody chains, Casual Corner and B. Dalton Bookseller are providing discounts on certain goods that customers buy with their MasterCards.

Many of these promotions, however, carry the same disadvantages as markdowns: They reduce profits without doing much to develop long-term customers. They also can damage the image of a store that wants to be regarded as more than a discounter.

The shoppers that these promotions attract are “people who are looking for a bargain, who will cherry-pick your store and not really help your bottom line,” said Steidtmann of Management Horizons.

In addition, one-day or two-day sales and promotions can be inconvenient for shoppers and thus create ill will, said Michael Goldstein, vice chairman of Toys R Us. “The customers who don’t take advantage of the sales feel that they have been taken advantage of,” he said.

Goldstein acknowledged that Toys R Us is putting more emphasis on price promotions this year, but he pointed out that its discounts would extend throughout the holiday season.

To do more to breed customer loyalty and ultimately reduce the need to cut prices, some retailers are taking other tacks. Brooks Bros., for example, wants to avoid undermining its polished image with frequent sales, but that didn’t stop it from offering monogrammed pocket diaries.

“We see this as building loyalty and a long-term franchise for the business,” said William V. Roberti, the company’s president and chief executive. He conceded that it is bringing more people into the stores in the short run, too.

Like numerous other upscale retailers, Brooks Bros. this Christmas is also expanding its private sales program. It is inviting its best customers to come in and shop at times the store ordinarily is closed, promising food, drinks and extra attention from the sales staff.

Sears started its so-called bonus club to develop more repeat business and credit card accounts. For every $200 of merchandise that customers charge on their Sears credit cards, they get $2 in discount certificates.

Free travel promotions are becoming more widespread, too. For example, the Broadway-Southern California is launching a sweepstakes Monday whose top prize is a free trip to Paris for two.

The company’s series of drawings, which began in February, are designed to encourage customers to use the company’s credit cards; anyone who buys merchandise with a Broadway card is automatically entered.

Many other promotions are thinly disguised not to look like promotions. For example, Montgomery Ward this month showered its suppliers and their employees with special discount coupons for a one-day “vendor appreciation day.”

San Francisco-based Emporium, a sister company to the Broadway, for the first time in more than a decade is setting up a carousel and children’s rides along with a “Christmas Wonderland” scene on the roof of its aging, five-story downtown store. “It’s all a matter of re-creating an image and making Emporium a place where people want to shop,” said Alice MacNaughton, senior vice president of Emporium.

And Harris & Frank, an apparel chain based in North Hollywood, has been trying to do well by doing good. In a program ending today, anyone who comes in and donates a coat for a homeless person is eligible for a discount of $40 on a new jacket and $60 on a new raincoat.

“It’s more of a good-will thing but, sure, we get sales off of it,” said Robert H. Blisten, manager of Harris & Frank’s Northridge store.