Sales Set for Last-Minute Buyers
Retailers will open their doors early and close late this weekend as they launch another wave of discounts in a last-minute drive to wring more revenues from what has become the busiest period of the holiday shopping season.
Consumers will find bargains aplenty during a weekend that will, in effect, stretch to Monday, Christmas Eve. But so far, deep discounting hasn’t excited shoppers as much as retailers had hoped.
“You see more and more discounting, but it doesn’t appear to be motivating people,” said Philip Zahn, who monitors the retail industry for ratings agency Fitch Inc.
A disappointing weekend could wreak further havoc on retailers’ bottom lines, already adjusted downward because of the recession and the shadow cast by the events of Sept. 11. The sales being trumpeted--up to 60% off on sweaters, jewelry and other slower-moving items--underscore the need for retailers to empty store shelves before jump-starting the inevitable post-holiday sales.
“The big question from a profit standpoint is how much merchandise is left on the shelves [this weekend] and how much more discounting they’ll have to do to get rid of it,” said William Ford, senior economic advisor for Telecheck, a Houston-based check-verification company.
The final holiday shopping weekend has grown in importance in recent years. Last year, it accounted for almost one-third of holiday sales. The final Saturday before Christmas has become the busiest shopping day of the year.
The National Retail Federation expects overall sales to rise by 2.5% to 3% over last season’s $201billion. Telecheck predicts sales in stores open for at least a year, an important retail industry measure, will increase 2%.
Instinet Research’s Redbook unit concludes that consumers are “reluctant to splurge in this very promotional retail environment.” Redbook’s consumer surveys underscore that the waning days before Christmas will make or break this holiday season.
There are bright signs on the horizon. Consumers, who drive two-thirds of the country’s economic activity, seem to be regaining confidence. The University of Michigan’s closely watched consumer sentiment index, for example, registered its third straight monthly rise in December, moving to 88.8 from 83.9 in November.
That surge in confidence, though, isn’t leading to exuberance along shopping aisles. Consumers want better values, and that’s benefited discounters, including Wal-Mart Stores Inc. and Target Corp.’s namesake retail chains.
It’s been a harsh season for many department stores and specialty apparel retailers, including Gap Inc., which issued a fourth-quarter profit warning after same-store sales for the four-week period ended Dec. 1 fell 25%.
Bucking the trend among department stores, as it has been all year, is Menomonee Falls, Wis.-based Kohl’s Corp., a savvy department store operator that wins praise from industry observers for offering a good blend of merchandise that’s displayed in attractive stores. Kohl’s, which recently purchased land for a massive warehouse in San Bernardino County, now is scouting locations for Southern California stores.
Some merchandise is jumping off shelves. DVD players are popular because prices have fallen enough to ignite consumer demand. Sales of video game consoles and games were hot early in the season, courtesy of a marketing war between Sony Corp., Microsoft Corp. and Nintendo Inc.
Consumers also are snapping up home-theater systems, digital cameras and wireless phones. And, even though the nation is in the ninth month of a recession, retailers report steady interest in freezers, dishwashers and other appliances.
The surge in appliances is driven partly by the housing refinance boom that occurred when interest rates fell to historic levels. Appliance sales also are in keeping with consumers who’ve responded to terrorist attacks by focusing more on family and home.
Advertisements now playing on television and in newspapers provide a road map of what’s hot and what’s not. Mother Nature surprised retailers with unseasonably warm weather, so Kohl’s’ advertisements trumpet 50% price cuts on sweaters and certain footwear. Kmart Corp. is promoting 60% discounts on jewelry, a category that’s been hurt by recessionary fears.
What Ford of Telecheck refers to as the “moonlight sale mentality” is evident at such stores as Target, which is opening its doors at 7 a.m. today, Sunday and Monday. Kmart, which kept its doors open the entire four-day Thanksgiving weekend, opened its doors at 6 a.m. Thursday and won’t close them until 8 p.m. Christmas Eve.
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Times staff writer Abigail Goldman contributed to this report.
