Image: Target clerk bags purchases
M. Spencer Green  /  AP
With two weeks left until Christmas, some analysts are predicting shoppers may wait until just before the holiday to buy gifts.
updated 12/11/2007 11:41:26 AM ET 2007-12-11T16:41:26

With little more than two weeks left until Christmas, U.S. retailers who have seen sales drop off since the holiday shopping season's strong start are feeling the pressure of the final stretch, with many merchants offering deep discounts in order to lure last-minute shoppers.

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."

Nervous retailers have already started cutting prices. 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. 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 jewelry.

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 Dec. 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."

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.

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 center 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 U.S. payrolls grew at a modest pace in November, according to government figures released 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."

(MSNBC.com is a joint venture of Microsoft and NBC Universal News.)

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.

Best Buy Co. officials said that traffic was strong this past weekend, with shoppers buying flat-panel TVs, GPS systems and game consoles. Chuck O'Donnell, a manager at the Best Buy store in West Paterson, New Jersey, said many customers are looking for the Wii.

Karen MacDonald, spokeswoman for Taubman Centers Inc., which operates 24 malls across 11 states, said business Saturday was anywhere from unchanged to up mid-single digits from a year ago. For the week ended Saturday, sales were up anywhere from low to mid-single digits from the year-ago period.

"The momentum is definitely building," MacDonald said. She added that electronics — Global Positioning System receivers and digital cameras — and UGG sheepskin boots are among the strongest sellers, but home furnishings remain weak. She added that stores are reporting a spike in sales of gift cards.

Meanwhile, online retailers are preparing for the busiest shopping days ahead this week. Internet research company comScore Inc. reported Sunday that total online spending from Nov. 1 through Dec. 7 has reached more than $18 billion, up 18 percent from the same period a year ago.

"It was a terrific kick-start to December, but we expect the upcoming week to be the heaviest online spending week of the holiday season as the procrastinators and late-season deal-seekers come out in earnest," comScore Chairman Gian Fulgoni said in a written statement.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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