Stores look to week after Christmas for sales

Shop­pers nav­i­gate their way around Toys R Us Wednes­day in Times Square in New York. This hol­i­day sea­son is shap­ing up to be the weak­est since the coun­try was in the mid­dle of a deep reces­sion in 2008. That not only shows that stores mis­read Amer­i­cans’ will­ing­ness to spend dur­ing this period of eco­nomic uncer­tainty. It also could indi­cate that the days of throngs of shop­pers spend­ing thou­sands of dol­lars willy nilly on hol­i­day gifts may be long gone. (Asso­ci­ated Press | Frank Franklin II)

CANDICE CHOI

MAE ANDERSON

AP Retail Writers

Bargain-hungry Amer­i­cans will need to go on a post-Christmas spend­ing binge to sal­vage this hol­i­day shop­ping season.

Despite the huge dis­counts and other incen­tives that stores offered lead­ing up to Christ­mas, U.S. hol­i­day sales so far this year have been the weak­est since 2008, when the nation was in a deep recession.

So stores now are depend­ing on the days after Christ­mas to make up lost ground: The final week of Decem­ber can account for about 15 per­cent of the month’s sales, and the day after Christ­mas is typ­i­cally one of the biggest shop­ping days of the year.

Stores, which don’t typ­i­cally talk about their plans for sales and other pro­mo­tions dur­ing the sea­son, are known for offer­ing dis­counts of up to 70 per­cent after the hol­i­day. This year, they’re hop­ing to lure more bar­gain hunters who held off on shop­ping because they wanted to get the best deals of the season.

Still, a pow­er­ful win­ter storm, which pounded the nation’s mid­sec­tion on Wednes­day and is head­ing toward the North­east, could hurt post-Christmas shop­ping. The storm is bring­ing high winds and heavy snow that dis­rupted hol­i­day travel, knocked out power to thou­sands of homes and were blamed in at least six deaths.

The Macy’s loca­tion in Her­ald Square in New York was bustling with shop­pers on Wednes­day. There were a vari­ety of deals through­out the store: candy dis­pensers for 70 per­cent off, var­i­ous men’s clothes were “buy one get one free,” belts for 50 per­cent off, a bin of ties for $9.99.

Ulises Guz­man, 30, a social worker, was shop­ping in the store. He said he waited to shop until the final days before Christ­mas, know­ing that the deals would get bet­ter as stores got more des­per­ate. He said he was expect­ing dis­counts of at least 50 percent.

The strat­egy worked. He saw a coat he wanted at Banana Repub­lic for $200 in the days before Christ­mas but decided to hold off on mak­ing a pur­chase; on Wednes­day, he got it for $80.

“I’m not look­ing at any­thing that’s orig­i­nal price,” he said.

Lenox Square Mall in Atlanta was also crowded by mid­day on Wednes­day. Laschonda Pitluck, 18, a stu­dent in Atlanta, was shop­ping after Christ­mas because she wanted to get the best deals. Last year she spent over $100 on gifts but this year she’s keep­ing it under $50.

Pitluck said she found items for 50 per­cent off, includ­ing a hoodie and jeans for her­self at Amer­i­can Eagle and a shirt at Urban Out­fit­ters. She said she would have bought the clothes if they hadn’t been 50 per­cent off.

“I wasn’t look­ing for deals before Christ­mas,” said Pitluck, who also bought box­ers for her boyfriend.

The shop­ping rush after Christ­mas illus­trates just how impor­tant hol­i­day sales are. Con­sumer spend­ing accounts for 70 per­cent of eco­nomic activ­ity, and many retail­ers can make up to 40 per­cent of their annual rev­enue dur­ing the two-month hol­i­day shop­ping period at the end of the year.

So far, hol­i­day sales of elec­tron­ics, cloth­ing, jew­elry and home goods in the two months before Christ­mas increased 0.7 per­cent com­pared with last year, accord­ing to the Mas­ter­Card Advi­sors Spend­ing­Pulse report that was released on Tues­day. Spend­ing­Pulse, which tracks spend­ing, said that’s the weak­est hol­i­day per­for­mance since 2008 when sales dropped sharply, although the com­pany did not know by how much.

The Spend­ing­Pulse data, which cap­tures sales from Oct. 28 through Dec. 24 across all pay­ment meth­ods, is the first major snap­shot of hol­i­day retail sales. A clearer pic­ture will emerge next week as retail­ers like Macy’s and Tar­get report monthly sales.

In the run-up to Christ­mas, ana­lysts blamed bad weather for putting a damper on shop­ping. In late Octo­ber, Super­storm Sandy bat­tered the North­east and mid-Atlantic states, which account for 24 per­cent of U.S. retail sales. That cou­pled with the pres­i­den­tial elec­tion, hurt sales dur­ing the first half of November.

Shop­ping picked up in the sec­ond half of Novem­ber, but then the threat of the coun­try falling off a “fis­cal cliff” gained strength, throw­ing con­sumers off track once again. Law­mak­ers have yet to reach a deal that would pre­vent tax increases and gov­ern­ment spend­ing cuts set to take effect at the begin­ning of 2013. If the cuts and tax hikes kick in and stay in place for months, the Con­gres­sional Bud­get Office says the nation could fall back into recession.

Still, The National Retail Fed­er­a­tion, the nation’s largest retail trade group, said Wednes­day that it’s stick­ing to its fore­cast for total sales for Novem­ber and Decem­ber to be up 4.1 per­cent to $586.1 bil­lion this year. That’s more than a per­cent­age point lower than the growth in each of the past two years, and the small­est increase since 2009 when sales were up just 0.3 percent.

Kathy Gran­nis, a spokes­woman for the group, noted that the trade group’s def­i­n­i­tion of hol­i­day sales not only includes clothes and elec­tron­ics, but also food and build­ing supplies.

“Stores have a big week ahead, and it’s still too early to know how the hol­i­day sea­son fared, at this point,” she said.

Posted by AP News on Dec 26 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.