After limping through a holiday gift-buying season expected to be the worst in decades, US stores made it to Christmas with little to celebrate.
For many merchants, the winter and beyond are likely to get even bleaker, because Americans are too worried about their jobs and the recession to do much shopping.
Over the past year, US shoppers have drastically changed their spending habits in ways not seen since the 1970s, switching to store brands and discounters like Wal-Mart. During the holiday shopping season, they cut back on their spending, took advantage of big discounts and bought practical gifts.
PHOTO: AFP
One of the big worries for stores is what to do with the mounds of items they still have to sell. If 75 percent off before Dec. 25 didn’t make people splurge, will even bigger deals afterward do the trick? Another problem is that shoppers shunned gift cards this season. That means they are less likely to return to the stores after the holiday.
“The new consumer mantra for this coming year is: ‘If I don’t need it, I won’t buy it,’” said Britt Beemer, chairman of America’s Research Group. “America is going from a consuming society to a planned-buying society. Everything is focused on saving more money.”
The retail industry could be looking at its biggest contraction in 35 years, said Burt Flickinger, managing director of consulting firm Strategic Resource Group. He estimates that 160,000 stores will have closed this year and predicts that an additional 200,000 will shutter next year. In March and April of next year, Flickinger expects 2,000 to 3,000 malls to shutter.
A number of stores struggled just to make it to Christmas.
Circuit City Stores filed for bankruptcy protection last month. It plans to keep operating, but KB Toys, which filed for bankruptcy protection earlier this month, has already begun to liquidate all of its stores and will shut down completely.
Finlay Fine Jewelry, which operates stores such as Bailey Banks Biddle, warned a week ago that it may not have enough cash to operate through the end of its fiscal year on Jan. 31, and may have to “significantly curtail” its business.
In Christmases past, stores could rely on a surge before or after the holiday to help save the season. But this year, it was virtually over before it began as stores had to slash prices on holiday goods as soon as they hit the shelves.
Stores had a good start, fueled by bargain buying, but sales soon flattened. For the last weekend before Christmas, total retail sales fell 5 percent from a year earlier as winter storms kept people home, research firm ShopperTrak RCT said.
Consumer spending fell for a fifth straight month last month, government data showed on Wednesday, the longest weak stretch in half a century, while incomes fell and layoffs mounted. The climate is expected to get worse before it gets better.
Economists have kept lowering their holiday predictions. Michael Niemira, chief economist at the International Council of Shopping Centers, now expects sales at established stores for last month and this month will fall 1.5 percent to 2 percent from the year before — making it the weakest holiday season since at least 1969 when the index began.
A full picture of the holiday season will not be known until Jan. 8, when major retailers report their sales figures.
Stores desperate to pull in shoppers started deeply discounting holiday goods starting last month, but that is expected to mean lower profits.
Ken Perkins, president of research company RetailMetrics LLC, expects overall store profits for the fourth quarter — which for most stores runs through the end of January — to drop nearly 19 percent from the same period a year ago. He expects profits to tumble about 10 percent in the first quarter.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique