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Big bargains attract shoppers to US stores

Pedestrians look at a holiday window display outside Bloomingdale’s in New York on Friday. PHOTO: BLOOMBERG

Steep discounts on clothes, toys and electronics enticed shoppers to stores this weekend but they are still making fewer purchases leading into the final stretch of the holiday shopping season.

Based on early reports from analysts and malls, sales results were generally mixed to moderately down this past weekend, the second-to-last of the season that can make or break many retailers.

Stores offered big discounts to shoppers who have been pulling back their spending, concerned about the recession and job stability. Shoppers came to stores for these discounts but largely stuck to their shopping lists and basic items like clothing, analysts say.

Traffic levels at stores were comparable to last year, said Marshal Cohen, chief industry analyst at market research group NPD Group. People were looking for deals but not as willing to spend their money as last year.

“The number of consumers actually making purchases were down and when they did purchase they purchased less,” Cohen said.

“The number of consumers actually making purchases were down and when they did purchase they purchased less.” — Marshal Cohen, chief industry analyst at NPD Group

Results were mixed across the country, with electronics still doing well and stores like warehouse-club operator Costco Wholesale Corp were mobbed, he said.

“It wasn’t as good as last year but it wasn’t as doom and gloom as everyone was expecting,” he said.

This Saturday was the strongest yet this season, said Karen MacDonald, a spokeswoman at mall operator Taubman Centers Inc.

Traffic was up at stores throughout the country, but in terms of sales, business overall ranged from slightly above, to flat, to slightly below last year’s levels, she said. Apparel was a top seller while high-end jewelry and home furnishings were weak.

Figures released on Sunday by SpendingPulse pointed to more signs that shoppers are continuing their frugal ways, despite a decent Black Friday spending surge. SpendingPluse is a data service provided by MasterCard Advisors that estimates US retail sales across all payment forms, including cash and checks.

From Nov. 28, the day after Thanksgiving known through Dec. 6, luxury sales dropped 34.5 percent compared to the same period last year, while overall apparel sales fell 22.9 percent. Electronic sales fell 22.3 percent.

Michael McNamara, vice president at SpendingPulse, said consumers are resisting big-ticket items priced US$1,000 or more.

“Spending has obviously contracted, but the key question is will it contract even further,” he said.

Online sales last week fell 1 percent to US$3.81 billion from the same week last year, according to research company comScore Inc., which called the drop “marginal.”

From Dec. 1, which marked the kickoff to the online holiday shopping season, through Friday, sales were up 3 percent to US$8.26 billion from last year, the firm said on Sunday.

Tuesday last week marked the heaviest online spending day on record with US$887 million in sales, the firm said, adding that it expects online retailers to continue offering discounts on products and expedited shipping to spur sales.

It noted apparel and accessories sales were up 21 percent in the first 12 days of December, while books and magazine sales rose 18 percent.

This season could shape up to be the worst in decades as the economy spins into recession and consumers worry about their slumping investments, rising prices and job stability.

Same-store sales are expected to be down as much as 1 percent last month and this month, according to Michael Niemira, chief economist at the International Council of Shopping Centers.

If that holds true it would mark the weakest season since at least 1969 when the index began. The only holiday period that was almost as weak was 2002, when same-store sales rose by only 0.5 percent, Niemira said. Same-store sales are sales at stores opened at least a year and are considered a key indicator of a retailer’s health.

Slumping sales are weighing on retailers. Last week they forced retailer KB Toys to file for bankruptcy protection for the second time in four years. The 86-year-old company plans to begin going-out-of business sales at its stores immediately.

With spending expected down, stores have been stepping up their discounts to try to capture whatever money consumers decide to part with.

Consumers had said all along they were going to cut their spending, stick to basics and look for deals, and they’ve kept their word, said C. Britt Beemer, chairman of America’s Research Group.
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