Get ready for the final showdown between the nation’s retailers and consumers.
With Dec. 25 less than a week away, many stores are finding themselves in the same position as in recent years, counting on those procrastinators to meet their sales goals even amid early reports of a strong shopping weekend.
With some notable exceptions, stores have generally stuck to planned discounts throughout the holiday season, not buckling to pressures from shoppers who are waiting for the best deals. That’s good news for retailers’ fourth-quarter profits.
But it also makes it more nerve-racking as merchants wait for the big sales surge. After pulling in better-than-expected crowds on Black Friday, the start of the holiday shopping season, shoppers have been returning to stores at a slower-than-expected pace after a post-Thanksgiving lull.
Shoppers did shop early for certain hot toys such as Fisher-Price’s T.M.X. Elmo and Sony’s PlayStation3, and popular consumer electronics like flat-panel TVs. Pricey fashions and jewelry as well as luxe handbags have been hot too, but for most of the other merchandise, particularly apparel, consumers are dilly-dallying.
Overall, “it has been a bit sluggish in the month. Everyone is counting on the last days, but I am still optimistic,” said Michael P. Niemira, chief economist at the International Council of Shopping Centers. “It will get down to the wire.”
Kim Roffey, a strategist at Kurt Salmon Associates, agreed, noting with Christmas falling on a Monday, shoppers know they have a full weekend before the holiday. Merchants, however, still were hoping that shoppers would be a bit more motivated to buy as Hanukkah occurred earlier this year than last year.
“The general consumer consensus is that they have time,” Roffey said. “That’s great for consumers, but nerve-racking for retailers.”
Many consumers interviewed at the malls on Saturday seemed to be in no rush.
“I shop for all of my gifts on Christmas Eve,” said Theresa Watson, of Detroit, who was at Eastland Mall near Detroit. “I get up real early knowing that’s what I’ll be doing all day and then I wrap gifts all night. That’s my tradition.”
She added, “There’s all kinds of deals. Everyone’s trying to get rid of everything.”
Ruby Shelley of Houston, who was at a local Sears, Roebuck and Co. store said she hadn’t had the time to shop. “I’ve been too busy,” she said.
Clearly, this holiday season, the nation’s stores— both online and on land — have made it easier for consumers to procrastinate. Shoppers who waited are faced with expanded hours and even more enticing deals in the final days. J.C. Penney Co. had an 18-hour blowout sale on Saturday, which started at 6 a.m., an hour earlier than last year.
Meanwhile, Toys “R” Us aims to pull in procrastinators by having huge shipments coming this week of the hard-to-find toys. They include more than 65,000 T.M.X. Elmo units, more than 30,000 Fisher-Price’s Kid Tough Digita Cameras and more than 6,000 Sony Inc.’s PlayStation3 consoles.
Jerry Storch, chairman and chief executive of Toys “R” Us said that the toy seller is better stocked with the hottest toys in the final days before Christmas compared to years past.
“We made this an intense focus,” he said. “We expect this week to be huge.”
Meanwhile, in cyberspace, retailers are making it easier for procrastinators by pushing back deadlines for standard shipping in time for Christmas deliveries as their operations become more sophisticated.
The retail industry is being forced to cow-tow to consumers who are “shopping much smarter than they use to,” said Craig R. Johnson, president of retail consulting firm Customer Growth Partners. “Unless it is an exclusive item or the supply is limited, they are not going to pay full price.”
Jackie Vargas, from Trenton, said she was planning to finish her holiday shopping over this past weekend, after researching deals both online and offline.
“I did a lot of shopping online this year to avoid the crowds and see what online deals they had that department stores didn’t have,” she said.
Early reports of this past weekend were encouraging, but analysts say that the gap between the winners and losers is only widening.
The toy industry has been helped by a plethora of hot toys, giving analysts hopes that the industry will see a reversal in several years of sales declines. Toys “R” Us’s Storch said he has been “pleased with results.”
Ernie Speranza, chief marketing officer at KB Toys, noted that traffic this weekend was up over a year ago, but said he expects KB to meet holiday sales goals by the end of January. “It is no longer a two-month period,” he said.
The well-heeled, benefiting from a stock market rebound and big bonuses on Wall Street, have splurged on diamond necklaces and luxury handbags, helping to boost sales at such stores as Bergdorf Goodman and Saks Fifth Avenue.
In an interview on Wednesday, Steve Sadove, CEO of Saks Inc., which operates Saks Fifth Avenue, said: “We’re feeling quite good.” Sadove noted that merchandise across the board, from designer handbags to accessories are doing well.
For most other apparel, shoppers are waiting for the best deals. Department stores such as Federated Department Stores Inc.’s Macy’s and Bloomingdale’s as well as J.C. Penney Co. Inc. are expected to have solid gains, benefiting from industry consolidation and better fashions. But the sales performance at mall-based apparel stores is mixed.
John Morris, managing director at Wachovia Securities, noted that discounting at the mall-based apparel stores he tracks has been “contained,” though some like struggling Gap Inc. are discounting heavily, while others like American Eagle Outfitters Inc. are not.
In addition to American Eagle, winners this holiday season include J. Crew Inc., Coach Inc. and Abercrombie & Fitch Co., according to Jennifer Black, president of Jennifer Black & Associates, an equity research firm.
Black noted that it will be interesting to see if stores will accelerate discounts even more beyond what they planned. That could spark shoppers like Dwayne Knotts of Houston to buy.
“...We got a budget,”’ she said. “We just stay within our means. We’re hoping to spend less than last year.”