A Soft Retail Season at Present
There are four shopping days before Christmas, but who’s counting?
Americans pulled back as the holiday drew closer, with year-over-year sales tumbling 5.9% last week and more than 3% over the weekend, according to ShopperTrak RCT Corp.’s National Retail Sales Estimate.
Experts cited a variety of factors, including the lure of the Internet and the popularity of gift cards, which aren’t counted as sales until they’re redeemed.
In Southern California, even the weather was blamed.
“Just a little snap in the air would make you feel a little more holidayish,” said Laurel Crary, general manager of the Beverly Center, where the double-digit sales gains the mall had been reporting all year slipped into what she called the “high single digits” in December.
But a lot of merchants weren’t crying in their eggnog. Stores that sell luxury goods fared well, evidenced over the weekend by the fur and cashmere the well-heeled were snapping up at the Beverly Center and by the multitudes on Rodeo Drive.
“It’s been a renaissance this year in Beverly Hills,” said Thomas J. Blumenthal, president of Gearys, purveyor of fine linens, crystal and jewelry, where sales are up 15% this season compared with 2003.
In Costa Mesa, South Coast Plaza attracted 20,000 more people Saturday and Sunday than it did the weekend before, said Debra Gunn Downing, marketing director for the mall.
“Our business is definitely being driven by the luxury segment,” she said. “We will finish the season with our best Christmas ever, according to the trend at this point.”
The general trend, however, hasn’t been all that cheery.
The Saturday before Christmas typically is the busiest shopping day of the year (though in a fluke, the honor in 2003 passed to the day after Thanksgiving). But year-over-year sales were down 7% on Saturday, according to ShopperTrak, a Chicago firm that monitors more than 30,000 retail locations.
It has been a season of surges and stalls. Shoppers sprinted out of the gate at the launch of the shopping period, sending same-store sales, or sales at stores open a year or more, up 11% the day after Thanksgiving. But enthusiasm quickly fizzled. Since then, it’s been “a struggle,” said Michael Niemira, chief economist for the International Council of Shopping Centers and an advisor to ShopperTrak.
That may be partly because people are spending their money in different ways, Niemira said, citing a survey in which 22% of consumers said they would buy more gift cards than in 2003, 19% said they would do more Internet shopping and 12% said they would increase their mail-order and catalog purchases.
People had an incentive to procrastinate this year because Christmas falls on a Saturday and many offices are closed Friday, meaning it can be a full shopping day. But a National Retail Federation survey showed that the average consumer had completed almost 82% of his or her shopping by Sunday.
According to the results of an opinion poll released Monday by America’s Research Group, chains that slashed prices or offered crack-of-dawn deals, including J.C. Penney Co. and Sears, Roebuck & Co., were rewarded with customers.
Wal-Mart Stores Inc. attracted the most -- 43.1% of those surveyed said they went to a Wal-Mart, compared with 39.2% last year. The discounter launched an aggressive ad campaign after playing coy and losing out to rivals at the start of the season.
“Shoppers were out there looking for deals,” said Britt Beemer, chief executive of America’s Research Group.
Door busters aren’t de rigueur in Beverly Hills. Instead, it might have been longer shopping hours and snazzy street decorations -- like $1 million worth of Baccarat chandeliers shimmering along Rodeo Drive -- that helped boost sales in the famed 90210 ZIP Code.
About 80% of area merchants agreed to extend weekday operating hours to 8 p.m. from 6 p.m., said Gearys’ Blumenthal, who is also chairman of the Beverly Hills Holiday Committee.
On Sunday, Santa Ynez, Calif., resident Ken Karas, 51, tried on a Rolex watch in Gearys while his wife, Katie, 50, selected a Daum crystal vase as a gift for some friends.
“We’ve been wandering around Beverly Hills spending our fortune,” said Karas, who predicted he would spend about the same amount this year as he did in 2003.
Beverly Hills resident Roni Scharf took a break from gift-buying duties Sunday to try out a Toshiba Qosmio laptop computer at Decret. She passed on two items at the store, a pair of cuff links made from 100,000-year-old mammoth tusks and a Ferrari Stradale limited-edition surfboard, both priced at $5,000.
So far, Scharf said, she had purchased cookies at Williams-Sonoma and clothing by Ralph Lauren as gifts for friends. It was anyone’s guess, she added, whether she would spend more on presents this year compared with years past.
“At the end, you never know,” Scharf said. “It’s when the bill comes in. You charge it and then you see.”
Since Nov. 1, Americans have spent more than $172.1 billion using Visa cards, a nearly 17% increase over the same period last year, Visa U.S.A. said Monday.
But some people are stalled now because they’ve charged to their maximum, said Marshal Cohen, chief industry analyst for NPD Group, a market research firm based in Port Washington, N.Y. “Consumers are telling me that they have to make another payment on their cards,” he said.
For retailers, the sales picture could brighten as procrastinators weigh in this week and bargain hunters and gift card holders hit the malls after Christmas. But some experts predict stores will slash prices in a bid to beef up sales, and that can hurt profits.
“We’re already declaring it will be a soft season,” said Niemira, who has projected that same-store sales will rise 2.5% to 3% for November and December combined.
“At this point,” he said, “we’re still trying to get within that range.”
