Retail

Retailers sweat as shoppers await post-Christmas deals    

Dec. 23, 2013 at 2:44 PM ET

Shoppers look through discount pamphlets at the Best Buy electronics store in Westbury, N.Y. Retail experts say more shoppers are waiting for bigger discounts this year.
SHANNON STAPLETON / Reuters
Shoppers look through discount pamphlets at the Best Buy electronics store in Westbury, N.Y. Retail experts say more shoppers are waiting for bigger discounts this year.

With just two days to go before Christmas, it's becoming clear that shoppers won the annual game of chicken.

While retailers aren't exactly tumbling off a cliff, they've rolled out aggressive last-minute efforts to entice shoppers to their stores or websites. Consumers are responding to these promotions, which include staying open for days straight, discounts of 40 percent or 50 percent and free delivery by Christmas as late as Monday.

Even with these inducements, though, shoppers are buying far more selectively than retailers had hoped, and some even say they'll wait until after Christmas to make purchases so they can score even bigger discounts.

“People just held back,” said Jeff Feinberg, managing director with professional services firm Alvarez & Marsal. “They just didn't spend as much, so retailers really had to drop prices in order to spur it,” he said.

“I just waited until this weekend to [pay] what I thought was fair,” said Andrea Vollf, an interior designer in Schaumburg, Ill. “Stores pretty much overprice everything to cover their overhead …. I don't see the point of paying $100 for something that's maybe worth 10 or 20 bucks. I just wait for the sales,” she said.

Vollf said she didn’t have as much company at the mall as she expected over the weekend. “I was kind of surprised,” she said. “I didn't have to fight with people to get my presents.”

Holding out for deeper discounts

In-store analytics company RetailNext studied 450 stores nationwide and said traffic dropped by about 7 percent Friday and Saturday. “Early indications show a miss on comparable sales in brick-and-mortar stores compared to last year,” the company said in a statement.

“It has been a promotional season,” said Joseph Feldman, senior analyst at Telsey Advisory Group. “We still think comps will be up 2, 2.5 percent in aggregate … with total sales up in the 3 to 4 percent range,” he said.

Other analysts also predicted that same-store sales would inch up 2 percent to 3 percent across the retail sector overall, with aggressive discounters and value brands faring the best. Across most income levels, shoppers responded to a still-slow economy, while the shorter holiday shopping season gave them less time to buy, Feinberg said.

“There's still this overhang and people … hold their purse strings a little bit tighter,” said Morningstar equity analyst Jaime Katz. She said retailers responded by lowering prices, if not across the board, at least on selected items. In these final days, “It seems like it's escalating,” she said. “To me, that would indicate holidays didn't turn out as fruitful as maybe they had originally hoped.”

In the crush of discounts, shoppers apparently still want more.

“When you ask consumers why they didn’t get finished, the number one reason was they were waiting for bigger discounts,” said Britt Beemer, chairman and founder of America's Research Group. In a survey, nearly a quarter of last-minute shoppers said they were holding out for 60 percent or 70 percent off discounts.

RetailNext said shoppers who opened their wallets were spending more — sales were up between 3 percent and 4 percent, but whether that’s enough to make up for fewer shoppers remains to be seen. “I think people are willing to spend more this year; (I) think they just want to see lower prices,” Katz said. “It’s great for consumers and it stinks for companies.”

'It's still a present' after Christmas

Vollf said she planned to continue her seasonal shopping after Christmas. “I know they’re going to be having a lot of 50 percent off or 60 percent off. For the things that are not gifts or an emergency, I'm waiting until the 26th and I'm going to shop it,” she said. “I might spend the same amount and get more items.”

Mark LoCastro, spokesman for DealNews, said some shoppers were using gift cards as a kind of placeholder gift that recipients could use for post-Christmas bargain-hunting. “Get a gift card and put it under the tree, which will force the recipient to shop the after-Christmas sales, which are way better than they are before Christmas,” he said.

That’s what Raleigh, N.C., resident Michelle Morton said she decided to do. Morton said waiting until last weekend to do some shopping paid off — she was able to get an extra discount on an iPad mini for one of her kids — and she expected the deals to be better after the holiday. Rather than purchase clothes for her teenagers, the 43-year-old professional organizer and life coach had what she called a “light bulb moment” and bought them gift cards for their favorite stores.

“After Christmas, all that stuff is going to be on sale so they're going to be able to get more than if I buy it now,” she said. “We need to do our shopping the day after Christmas.”

One bright spot for retailers there is that gift card users tend to spend more than the amount of the card. “It helps, especially to get people back in the stores in the next week or two,” Feldman said. “The week after Christmas is a big period.”

While giving after-Christmas gifts isn’t likely to become the norm, it could certainly grow between close friends or relatives. “Most kids probably understand you can get them placeholder smaller-ticket items,” Katz said, and deliver the goods after Christmas. “The worst that happens is you wind up paying the same price as before Christmas.”

Paul Zuk of Bayonne, N.J., said he doesn’t consider Christmas Day an actual deadline for buying gifts. “I actually plan to do a lot more shopping after Christmas,” said Zuk, a 26-year-old computer programmer. For his sister and his girlfriend, Zuk said he had plans for big-ticket gifts, but that he would wait until after the holiday because he expected better prices.

“They got little things now and I'm going to get better things after the holidays,” he said. “It's still a present, no matter what day you give it to them.”

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