Holiday shopping season a disappointment so far
Sparse crowds at malls and “50 percent off” signs at The Gap, Ann Taylor and other stores give a clue as to how the holiday season is going.
It’s shaping up to be the most discount-driven holiday season since the country was in a deep recession. It’s also one of the most disappointing for stores.
Sales were up 2 percent to $176.7 billion from the start of the season Nov. 1 through Sunday, according to data obtained by The Associated Press from ShopperTrak.
That’s a slower pace than expected given that the season has just a few days left: ShopperTrak is forecasting sales to rise 2.4 percent to $265 billion for the two-month stretch that’s typically the year’s busiest shopping period.
The modest growth comes as the amount of discounts that stores are offering is up 13 percent from last year — the highest level since 2008, during the recession, according to the financial services firm BMO Capital Markets.
“The holiday season has been marginal to just OK,” said Joel Bines, managing director and co-head of the retail practice at AlixPartners. “Retailers are doing anything they can to get rid of merchandise.”
The data underscore how aggressive discounting has been a blessing and a curse for retailers. Since the recession, the only way to get Americans into stores has been to flash huge yellow discount signs in front of their faces.
But all that discounting has had unintended consequences. As shoppers become immune to deals, retailers have learned that they must offer bigger discounts to get them into stores.
That erodes sales since shoppers are spending less. It also eats away at profit margins. Still, analysts say, retailers have created a cycle of constant discounting that they’ll have to continue to attract shoppers, many of whom are still dealing with stagnant wages and rising costs for healthcare and other items.
Stores are rolling out more discounts to try to attract last-minute shoppers. The number of promotional emails that seven major retailers, including Wal-Mart and Target, sent for the 13 days that ended Sunday was up nearly 70 percent from the same period last year, according to Market Track, which tracks discounts.
And Toys R Us is throwing in unplanned discounts Saturday, typically the season’s biggest sales day. Kathleen Waugh, a Toys R Us spokeswoman who called the season “hypercompetitive,” said the retailer is cutting prices on popular toys. Hasbro’s Furby Boom, a furry robotic pet that responds to sounds and touch, is being reduced to $39.99 from $59.99.
Retailers are hoping to lure shoppers like Larry Berge.
By last weekend, he had completed only 20 percent of his holiday shopping. He was taking advantage of a 30 percent coupon on pajamas for his wife at a Victoria’s Secret in Atlanta on Sunday. “It’s not like shopping as much as it is a targeted surgical strike,” said Berge, 44, a physician.