Shopping’s mixed bag
Last-minute shoppers headed to the nation’s stores and malls on the day before Christmas, looking for the final items they needed and searching for good deals — but for retailers, the season was essentially over long ago.
Many merchants are already tallying up just how dismal their sales were in a season expected to be the worst in decades.
"It’s beyond the worst fears of retailers," said C. Britt Beemer, chairman of America’s Research Group.
Much is at stake. The holiday shopping season accounts for as much as 40 percent of annual profits for many retailers, and the earnings outlook is growing more dire every week.
Retailers’ woes were good news for the dwindling numbers of shoppers who could afford to load up on deals. With mounds of inventory still left to sell, merchants are expected to deepen the discounts even more the day after Christmas.
But if 75 percent off before Dec. 25 didn’t make shoppers splurge, will even bigger deals do the trick amid mounting worries about layoffs and shrinking retirement funds?
In Christmases past, the retail industry relied on a surge before and after Christmas to help save the season. But this holiday period was virtually over before the Thanksgiving weekend ended as stores grapple with the most severe retrenchment in consumer spending in decades.
Merchants desperate to pull in shoppers started deeply discounting holiday goods as soon as they hit stores starting in November. But except for a shopping binge on the day after Thanksgiving, Americans have remained tight-fisted. When they do buy, they are looking for small-ticket, more practical gifts.
Analysts have kept slashing their holiday estimates. Michael P. Niemira, chief economist at the International Council of Shopping Centers, now expects that sales at established stores for November and December will fall 1 pay day loans.5 percent to 2 percent — making it the weakest holiday season since at least 1969, when the index began.
Excluding Wal-Mart Stores Inc., one of the few bright spots in retailing, same-store sales could be down as much as 7 percent for the holiday period. Same-store sales are sales at stores opened at least a year.
Get more business news, blogs and opinionStores are expected to post an 18.8 percent decline in fourth-quarter profits, marking the seventh consecutive period of profit declines, according to Ken Perkins, president of research company RetailMetrics LLC.
Merchants can’t even count on gift card sales to boost profits and sales. In the past, gift cards had lifted the post-Christmas season as shoppers went back to the stores to redeem the plastic on discounted and regular-priced merchandise.
Karen MacDonald, a spokeswoman at Taubman Centers Inc., which operates 24 malls in 11 states, said gift card sales had been tracking anywhere from single-digit declines to double-digit declines this season, a worrisome sign.
Gift cards "certainly drive business the week after Christmas," she said. "I think there were so many good deals out there that many people made that their gift of choice."