Bargain-Hunting Shoppers Turn Up Noses at Post-Christmas Sales
By Lauren Coleman-Lochner
Dec. 27 (Bloomberg) -- Mariel DeBernard was ready to be wowed by the post-Christmas sales when she turned up at the Fashion Centre at Pentagon City mall in Arlington, Virginia. It wasn’t to be.
“Normally I’d be loaded down with things, but there just aren’t that many deals, particularly for clothing,” DeBernard, a 40-year-old homemaker, said yesterday. “For most things, the prices aren’t that different than before Christmas.”
Retailers, which started offering discounts of 50 percent or more weeks ago, had been counting on post-Christmas sales to help rescue what will probably be the worst holiday season in four decades. That’s not going to happen, said Burt Flickinger, managing director of Strategic Resource Group, a retail-industry consulting firm in New York.
“This week isn’t going to do it,” Flickinger said in a Bloomberg Television interview. “Consumers are more cash- and credit-constrained than ever before. After a 25-year spending tsunami, they’ve shifted from spending to savings.”
Customer traffic at malls run by Taubman Centers Inc. was “light” early yesterday and picked up in the afternoon, said spokeswoman Karen Mac Donald. Taubman owns or manages 24 shopping centers in 11 states.
Advertising post-Christmas sales before the holiday, as retailers did this year, “really smacks a little bit of desperation,” said Patricia Edwards, a retail analyst and the founder of Seattle-based Storehouse Partners LLC.
Retailers count on the holiday season for as much as 35 percent of annual sales. They’re now scrambling for business as consumers retrench to cope with shrinking home and stock values, tightening credit and the highest unemployment rate in 15 years.
Spending Drop
Discounts of 70 percent off or more by Macy’s Inc., AnnTaylor Stores Inc. and other retailers failed to prevent a spending drop of as much as 4 percent during the last two months of 2008, according to data from SpendingPulse, owned by MasterCard Advisors. Including fuel, sales tumbled as much as 8 percent.
That’s the steepest drop since it started tracking the data in 2002, said Michael McNamara, MasterCard Advisors vice president of research and analysis. He estimates sales, excluding autos and gasoline, fell 2 percent to 4 percent from Nov. 1 to Dec. 24.
That projection follows forecasts of falling sales from industry trade groups. Sales at stores open at least a year may drop as much as 2 percent in November and December, the International Council of Shopping Centers said Dec. 23. That would be the steepest decline since at least 1969.
Too Much Inventory
“It is the worst kind of picture,” Michael Niemira, chief economist for New York-based ICSC, said in a Bloomberg TV interview.
Retailers still have too much inventory, said Edwards.
Wal-Mart Stores Inc., which said yesterday it would start selling Apple Inc.’s iPhone on Dec. 28, is one of the country’s few retailers still boosting sales. The discounter is one of two companies on the 30-member Dow Jones Industrial Average with shares gaining this year.
Meg McGuire, a county health inspector in Eden, North Carolina, spent a third of the $1,200 she and her husband had budgeted for the holiday on bicycles, toys and other discounted items at Wal-Mart on Black Friday, as the day after the U.S. Thanksgiving holiday in November is known.
The couple decided to not buy each other Christmas gifts for the first time in their 11 years of marriage.
“A lot of people are concerned about their jobs,” said McGuire, 30.
More than a dozen retailers, including electronics chain Circuit City Stores Inc., have sought bankruptcy protection this year as the credit squeeze and the U.S. recession drained sales. The holiday results indicate possible consolidation and further bankruptcy filings, said Gilbert Harrison, chief executive officer of retail advisory firm Financo Inc.
“It’s been difficult, much more difficult than anyone expected,” Harrison said in a Bloomberg Television interview from West Palm Beach, Florida.
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