US retailers set to increase discounts to bump up sales
NEW YORK (AP) — With little more than two weeks left until Christmas, US retailers who have seen sales drop off since the holiday shopping season's strong start are feeling the pressure of the final stretch.
Based on early reports, the past weekend was an improvement from a week earlier, but stores expect many shoppers to wait until the final few days before December 25, especially since Christmas falls on a Tuesday.
"This weekend was better than last weekend, but not good enough," said Marshal Cohen, chief analyst at market research company NPD Group Inc. "We are going to see more aggressive promotions."
Consumers — including those who were finishing their holiday shopping and others who just started — were armed with their wish lists but also scouring for bargains.
"I'm just about done. I just have two more stocking stuffers to take care of," said Julie Nies, of Cincinnati, who was at the local Eastgate Mall on Friday afternoon.
But Matt Schneider, who was at the same mall, was just getting started. He said he would probably finish "about Christmas."
After a strong Thanksgiving holiday weekend, the official start of the holiday shopping season, business has slowed even more than normal, resulting in mixed November results for retailers. Now, stores are stepping up discounts and other come-ons to get shoppers to buy.
Wal-Mart Stores Inc. launched its third round of in-store secret specials in addition to what was advertised in its circulars, including $398 Gateway laptop computers. And Toys "R" Us threw open its doors at 7 a.m. on Saturday, an hour earlier than a year ago, to offer special deals on toys until noon. Macy's Inc. was offering savings up to 50 percent on items from clothing to jewellery.
Shoppers were looking for big discounts.
"There were lots of good sales — 50 percent, 60 percent and sometimes even 70 percent," said Alice Lola of South San Francisco, who was spotted lugging an artificial Christmas tree to her car at Tanforan shopping centre in San Bruno, California.
Steve Birk of Elkhart, Indiana, who was shopping in Chicago, said he purchased some hats and shirts at an Eddie Bauer store that were 50 percent off.
"You always find discounts in some places, like Kohl's," he said. "But I have seen more bargains than usual."
Most of the discounts were planned, though Cohen said he thinks some retailers, particularly apparel merchants, are starting to bow to pressure by adding some extra price reductions. The problem, he said, is that "the consumer is not enthralled with shopping."
"The excitement is off," he said. "This is probably one of the most ho hum Christmases I have seen in five years."
Stores are struggling with a number of economic headwinds — a slumping housing market, a credit crunch and higher food and gas prices — that are making consumers more frugal about spending. Meanwhile, one bright spot is that the job market has held up, though US payrolls grew at a modest pace in November, according to government figures released on Friday.
Linda Thompson from Rochester, New York, who was at the local Marketplace Mall, said that she expects to spend less this holiday season.
"Everything is just more expensive, so we're shopping specifically by looking at prices and trying to get a good deal," she said.
But some analysts believe that stores also are at fault for generally disappointing business because with few exceptions, there is not anything exciting to buy, particularly in clothing. Hot items include the hard-to-find Wii from Nintendo Co., the 80-gigabyte Zune media player from Microsoft Corp., and some hot toys like anything Hannah Montana and Activision Inc.'s music video game "Guitar Hero III."
The popularity of gift cards — which stores are promoting heavily — has hurt stores because it has hurting impulse buying, Cohen said.
"We are seeing good days and slow days," Jerry Storch, chairman and CEO of Toys "R" Us, said Sunday. He added, however, that 50 percent of the holiday business is "still ahead of us."
Storch noted that shoppers are buying closer to Christmas Day and said he expects the last Saturday before Christmas to rival the day after Thanksgiving. The toy retailer will be offering another round of planned discounts this week on such popular toys as Smart Cycle, from Fisher-Price, for $89.99.
