Discounts Lure Shoppers over Weekend
The nation's shoppers -- taking advantage of deep discounts and expanded hours -- jammed stores over the last weekend before Christmas to try to grab a hard-to-find Wii or scoop up bargains on other items. But the spending surge may not be enough to offset what is shaping up to be a mediocre December for some retailers.
Based on early reports on Sunday, mall operators including Macerich Co. said they were pleased with the spending spree over the weekend, but they were still counting on Christmas Eve and post-Christmas business to meet holiday sales goals in what has turned out to be a nail biter of a season.
Meanwhile, even as shoppers continued to snap up flat-screen TVs, video game software and other gadgets, benefiting stores like Best Buy, the apparel business remains challenging, analysts said.
Ed Schmults, chief executive of toy merchant FAO Schwarz, which operates stores in Chicago and New York, said Sunday that pre-Christmas business is below expectations despite a sales surge this weekend.
"It's almost kind of worth waiting and shifting through the hustle and bustle," said Carly Moore, of Chicago, who was heading to Macy's on the city's State Street shopping corridor to scoop up some discounted clothing. But she was still frustrated that she couldn't find Nintendo's Wii game console, after trying at least five stores.
Valerie Glodowski of Stevens Point, Wis., who was with her boyfriend at Wisconsin's Wausau Center Mall, said she started holiday shopping two weeks ago and waited until the last weekend to finish out of sheer laziness.
"I am just winging it," she said.
Many merchants, which had struggled through a sluggish December after a strong start to the season, are counting even more on the final days before Christmas to make their holiday goals. With the three days prior to Christmas accounting for as much as 15 percent of holiday sales, there's a lot of business left on the table.
Macy's is keeping several of its stores in the New York metropolitan area, including its flagship store in Herald Square, open until 6 p.m. on Christmas Eve. About 1,000 of Sears Holdings' 1,387 Kmart stores are open for 64 hours straight, beginning at 6 a.m. Saturday and ending at 10 p.m. on Dec. 24, for the first time since 2002.
More Incentive to Wait
With Christmas falling on a Tuesday, shoppers were enticed to wait even longer this season to finish their holiday shopping. A challenging economy -- higher gas prices and a housing slump -- also made some shoppers hold off until the final days before the holiday. Retailers routinely discount items deeper as Christmas draws nearer.
"The gas prices and car insurance ... is up. I would say I'm spending less and worrying more about it," said Sondra Newton, of Warren, Mich., who was at Oakland Mall in Detroit on Friday. "I used to just take their (her children's) list and get the top ones on it. Now I have to think about 'what can I get at the best deal."'
Nevertheless, Michael P. Niemira, chief economist at International Council of Shopping Centers, is sticking with his December forecast for a 1.5 percent gain in same-store sales, or sales at stores opened at least a year. That would mean same-stores sales for the November-December period would be up 2.5 percent from a year ago.
"I think when the dust settles, stores will have met expectations, though they are modest," said Bill Martin, co-founder of ShopperTrak RCT, which tracks total sales at more than 50,000 retail outlets. He said he is still sticking with his 3.6 percent forecast for the November and December period, though he added, "some retailers will do OK, and others won't."
ShopperTrak is expected to release total sales for the week ended Saturday late on Monday.
Jerry Storch, chairman and CEO of Toys "R" Us, said the past weekend was strong, and that people were buying "everything," from video-game software to games. He noted that shipments of Wii are selling out as fast as Toys "R" Us gets them, while the retailer is running out of Fisher-Price's Smart Cycle, a stationary bike that plugs into the TV. The season's hot video game, "Guitar Hero 3," is also hard to find.
Karen MacDonald, spokeswoman at mall operator Taubman Center, noted that on Saturday business was up in the mid-single digits based on a spot-check of malls. Gift card sales are up in the double digits, and "more men are out buying fragrance gift sets and jewelry," she said.
Ken Gillette, senior vice president of operations at Macerich, noted that the weekend was "very busy," with traffic on Saturday up 20 percent from the previous Saturday. He said while the day after Black Friday starts off the season, the most intense sales volume comes in the few days before Christmas.
Shrinking Margins Will Hurt Earnings
Still, overall holiday sales gains could come at a cost for retailers, says Sherif Mityas, partner and central region leader at consultancy A.T. Kearney, noting that stores discounted heavily at the expense of margins. He believes that apparel merchants will see their fourth-quarter profits most hurt.
or many shoppers, it paid to wait given the plentiful offerings and good deals. The Children's Place Retail Stores was offering three graphic T-shirts for a total of $20. Pier 1 Imports Inc., which has been hit hard along with other home furnishings stores by the housing slump, was offering 50 percent discounts on candle gift sets and 35 percent price cuts on holiday potpourri.
"I got very good deals," said Nichelle Jones, of Chicago who had purchased two shirts at Lady Foot Locker, owned by Foot Locker, winter boots and an iPod at Wal-Mart Stores .
Edison Alberto of Miami Beach, Fla., got all of his shopping done in about an hour and a half on Friday night. He had about a dozen gifts to buy and found them all at a mall near Miami. His best deals, he said, were sneakers he bought for two cousins at Champs Sports.
"I thought they were going to be $80 or up," he said. "They were $55 each."