With just a few days left before Christmas, US retailers are in a lather to attract last-minute shoppers to salvage what has been a mediocre month.
Department-store operator Macy's Inc has slashed prices on everything from clothing to jewelry, while Toys "R" Us is offering price cuts of up to 75 percent this weekend. At stake are retailers' profits for the year and perhaps even the strength of the economy.
While consumers jammed stores at the start of the season for big discounts and shopped early for Nintendo Co's hard-to-find Wii game console, popular video games like Guitar Hero III: Legends of Rock and Australian sheepskin UGG boots, they waited until the end for most everything else, to take advantage of the best deals amid a challenging economy.
The biggest disappointment comes from women's apparel, extending a downturn that's grown deeper in recent months and serving as an ominous sign for the health of retailing in general. Women do the primary shopping for the family, so analysts say it's troubling that they are spending less time in the stores.
"There's been a malaise" among women's clothing sales and "it has spread to other areas," said Dan Hess, chief executive of Merchant Forecast, a New York-based research firm. "The panic button has been pushed, particularly in department stores."
And even with an expected sales surge this weekend, which traditionally accounts for about 10 percent of holiday sales, Lazard Capital Markets analyst Todd Slater expects that the last-minute spending will be "too little, too late" to save Christmas.
"When people think they are in a recession, they spend like they are in a recession," Slater said.
A series of snowstorms hampered spending in recent days, but clearly, economic worries -- particularly higher gas prices, an escalating credit crisis and a slumping housing market -- weighed on shoppers' minds.
According to ShopperTrak RCT Corp, a research company that tracks total sales at more than 50,000 retail outlets, business for the week ended yesterday slipped 0.4 percent compared to the same week last year. Total US traffic for the same period slumped 8.9 percent from a year ago.
Hess estimated that discounts at department stores are about 10 percent to 15 percent higher than a year ago, a worrisome sign for profits.
Slater noted that even gift card sales have been disappointing; in some cases, the gift card business may be "even down," based on spot checks with retailers.
The toy industry is expected to match last year's sales, at best. In addition to a challenging economy, the industry was hurt by a slew of recalls of Chinese-made products that made some shoppers cautious.
Online retailers, which have had an uneven season, are ending with a strong finish. According to comScore Inc, consumers spent almost US$25 billion online from Nov. 1 through last Tuesday, a 19 percent increase, though a bit below its 20 percent forecast.
While it is hard to discern how much of the discounting in the final hours is unplanned, stores are clearly slashing prices to eke out sales wherever they can.
Toys "R" Us stores are staying open till midnight every night until Christmas Eve. Several of Macy's stores in New York, will stay open around the clock until 6pm on Christmas Eve.
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