Post-Thanksgiving discounts begin early
It’s not even Thanksgiving, but the nation’s retailers, including Wal-Mart Stores Inc. and Toys R Us Inc., are jump-starting holiday sales with big discounts and door-buster specials starting Friday in what is expected to be a lukewarm Christmas season.
The sales blitz -- which comes three weeks earlier than the usual debut the day after Thanksgiving -- is great news for consumers. But the strategy shows the nervousness of merchants. Amid a deepening housing slump and higher food and energy costs, stores see the need to pull in shoppers as early as possible.
“This is clearly a win-win situation for consumers,” said Ken Perkins, president of RetailMetrics, a research company in Swampscott, Mass. But, he added, “This isn’t good news for stores’ profits. . . . It’s just more evidence that this is going to be a highly competitive season. Why would you start to drive traffic this early unless the retailing environment is not expected to be particularly strong?”
With Dec. 25 less than eight weeks away, the retail industry is struggling with shoppers’ eroding confidence amid higher daily living expenses and problems in credit availability. Although Wednesday’s move by the Federal Reserve to cut a key interest rate by a quarter-point will make it cheaper to borrow money, economists say it may be too late to help the holiday season.
Wachovia Capital Markets analyst John D. Morris said another big problem was that so far there weren’t any must-haves this holiday season. A year ago at this time, shoppers were in toy stores looking for the hard-to-find TMX Elmo from Fisher-Price, which is owned by El Segundo-based Mattel Inc.
“There is nothing out there,” Morris said. “And so the marketing itself becomes the message.”
Although many retailers, including KB Toys Inc. and Circuit City Stores Inc., said the holiday sales events set for this weekend were planned months in advance, Perkins said the early discounting didn’t bode well for the industry’s profit picture.
Major retailers such as Target Corp. start to report their third-quarter results next week.
In recent years, merchants have been pushing the holiday season earlier and earlier, dangling free shipping and discounts. But this year, the discounts -- coming only a few days after Halloween -- resemble the post-Thanksgiving Day blitz, with 50% reductions and other enticements.
Wal-Mart, which announced price cuts last month, said Wednesday that it would offer five major holiday specials, including a $348 laptop computer, starting Friday at 8 a.m. The four other specials will be kept secret until today, when shoppers can see them online, though they cannot purchase the items.
The discounts are being timed to the weekend’s debut of Wal-Mart’s new Christmas shops.
On Friday, Toys R Us will launch a two-day sale that will feature 100 discounted items. The door busters, which will be available Friday from 5 p.m. until closing and Saturday from 8 a.m. until noon, will include 50% price cuts on games, scooters and other items.
KB Toys will offer price cuts on this year’s popular new holiday toys as well as last year’s items.
“This is definitely a preview of Thanksgiving,” said Geoffrey Webb, director of advertising and sales promotion at KB. “We heard this is going to be a competitive holiday, so we are going to be right in the rings fighting it out.”
