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December 28, 2007

Despite discounts, gift cards, holiday sales disappoint

Journal photo / Bill Murphy
Rebecca Barlowe, a sales associate at Borders in Cranston, cashes in a gift card this afternoon.

People crowded into stores again today as they continued their post-Christmas shopping, but their spending this week may not be enough to cheer up retailers grinding through a mediocre shopping season.

Like many shoppers around the country, people at Providence Place mall were taking advantage of deep discounts and closeout sales as they exchanged ill-conceived presents or cashed in gift cards.

“It didn’t take long” to spend a $25 gift card at Victoria’s Secret where the goods were half-price, said Lindsay Wilcox, of Smithfield.

She and boyfriend Garrett Hogan were taking a break in the mall’s food court after making the rounds of Abercrombie & Fitch, Forever 21 and other stores.

Deep discounts are de rigueur this year, particularly at local outlets that won’t live to see the New Year, such as KB Toys and One Thousand Steps, both of which are closing their stores in Providence Place. Closeout prices at those stores are as deep as 75 percent off regular prices.

Even retailers on solid ground, such as high-end retailer Nordstrom Inc. took a third off regular-priced men’s apparel, while away from the mall, Target Corp. lowered prices on popular video games to $37 to rid itself of merchandise.

The discounting was forced on retailers by Americans who procrastinated about their holiday shopping chores and when they got around to them, didn’t spend as much as initially expected.

-- Journal staff writer Paul Grimaldi, with wire reports

Sales surged on the day after Thanksgiving, slumped for weeks afterward and then recovered a few days before Christmas, said Michael McNamara, vice president of research and analysis at MasterCard Advisors.

Only 50 percent of the respondents said they had completed half or most of their holiday shopping by the time the International Council of Shopping Centers surveyed shoppers from Dec. 13 to Dec. 16.

Fuel prices and severe storms influenced spending this season, said McNamara. Gas prices over the holiday period ranged between 30 percent and 35 percent higher than the comparable period last year.

“Overall, sales came in just above the lower end of the range we were expecting, maintaining the slower, modest growth we’ve been seeing throughout the year,” McNamara said.

The International Council of Shopping Centers, a trade group, said the last-minute shopping rush before Christmas didn’t save the season. It expects November and December same-store receipts to fall below the council’s October forecast of 2.5 percent growth for the two-month period.

Even a post-Christmas buying binge would leave that performance the smallest annual sales increase since 2002.

"Given the slow performance at the beginning (of December), it appears that the industry is on track for a sales gain that is slightly under our original expectation," said council economist Michael P. Niemira.

After the most disappointing holiday sales season in five years, retailers are pinning their hopes on those deep discounts and ubiquitous gift cards to rescue them.

Posted by Andrea Panciera at 5:24 PM | Permalink

December 28, 2007

Despite discounts, gift cards, holiday sales disappoint

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