Retailers Feel the Pinch of an Economic Grinch : Sales: A last-minute surge of buying failed to materialize at many stores.
Although a few specialty stores reported strong sales, Southland retailers’ hopes for a last-minute surge of Christmas buying generally fell short as grim economic news prompted many consumers to sit out the final weekend of the nation’s most critical retailing season, analysts and industry officials said Sunday.
“The last-minute surge of buyers isn’t going to happen,” declared Richard Giss, a retailing analyst at the accounting firm Deloitte Touche who spent the weekend canvassing Southland stores. “The last thing people needed was to have General Motors announce (last week) a 20% layoff. The impact, in terms of consumer confidence . . . was like the last nail in the Christmas coffin.”
Retailers, many of whom count on Christmas gift-buying to produce up to half their profits, had hoped consumers would stop holding out for further price cuts this weekend and go on a spending spree. While several Southland shopping malls were indeed bustling with shoppers, many consumers were only buying selectively or patronizing no-frills stores that offered discount merchandise.
“I’m buying much less than last year; I’m concerned about the economy,” said Culver City resident Sharron Spangler, whose two large shopping bags seemed to belie her new frugality. But Spangler, a physical fitness instructor who went to the Fox Hills Mall to do some last-minute shopping, said the bags contained only two gifts: a bedspread and a blanket for her two adult children.
Inside the Broadway at Fox Hills, several store employees--who all declined to be identified--said sales were down significantly from last year.
“We’ve even cut back on staff at the store because people just aren’t buying this year,” one store employee said. The store manager declined to comment.
Sales have also been disappointing at Dayton Hudson, parent company of Target Stores.
The retailer on Sunday didn’t have immediate figures on weekend sales. But officials said the Minneapolis-based department store chain has been particularly hard hit in recent days in California, Nevada and Arizona, where sales were down more than 10% compared to last year.
“Our sales are disappointing; the consumer is reluctant to go shopping because there is a lack of confidence in the economy,” Ann Barkelew, a vice president at Dayton Hudson, said of the firm’s nationwide performance. Barkelew added that even among those consumers who are buying, lavish spending has become passe. “People are buying moderate priced gifts--more functional kinds of things,” she said.
Stores that cater to such bargain-hunting shoppers appeared to fare somewhat better than full-service department stores.
Sales have jumped 27.4% over last year at Fox Hills Mall’s Kids Mart--but only with the help of seven price cuts this fall, according to Yolanda Galvez, the store’s manager.
Business is also up versus last year’s Christmas season at The Gap in the Westside Pavilion, where store manager Samantha Erickson said sales have been “tremendous.”
“This has been a pretty big weekend for us; on Saturday we were packed,” said Erickson, as more than a dozen shoppers streamed past her less than an hour after the store opened.
Ironically, although Gap stores are among the least festive looking of retailers, with lots of sales signs but typically just a lone Christmas wreath to mark the season, the chain has been one of the few retailers to boost business this year. Same-store sales at parent Gap Inc. have risen 8% compared to a year ago, the company said, attributing the good news to consumers’ preference for no-frills apparel.
The positive reaction to low prices has prompted some retailers to make some last-minute adjustments in their marketing strategy in hopes of spurring sales.
To fight off video outlets offering discount merchandise, for example, Sears, Roebuck & Co. recently cut the price of its “E.T.” videotape to $9.99 from $14.99. Similarly, J. C. Penney ran Sunday newspaper advertisements offering Southland consumers coupons giving them an extra 10% off on purchases made at J. C. Penney during the last three days before Christmas.
If such tactics do spark an eleventh-hour shopping surge, however, many stores may not be able to easily accommodate the extra business. They cut their inventory and sales staff because they were strapped for cash this year.
“The stores are trying to hold down the costs as best they can,” said Giss of Deloitte Touche. “But if you wait until the last minute to go shopping, you may not find what you want” because of the tight inventory. “And even if you do,” Giss added, “there may not be anybody to wait on you.”