Holiday buying about to boom
Experts say that while sales have been slow, they see a last-minute rush on the way.
By MARK ALBRIGHT
Published December 13, 2006
Danita Clarke has not started her holiday shopping yet. She won't even venture out until the week before Christmas.
"Prices usually come down at the end," said the owner of Muso Bugei Kai martial arts school in St. Petersburg, who compares her strategy to a "patient Ninja."
With 12 shopping days left, Clarke has plenty of company. After hitting a post-Thanksgiving lull, retail sales picked up only 1 percent over last year's pace through the weekend, according to the International Council of Shopping Centers. Now experts see signs building that the holiday shopping season is headed to a last-minute rush again.
"Consumers are further behind in completing their shopping this year than last year, so we anticipate a very hectic finish and a season that will come down to the strength of last minute buying," said Michael Niemira, chief economist for the shopping mall trade group.
Indeed, many Tampa Bay merchants noted what had been steady traffic turned serious.
"Business really picked up Monday and Tuesday," said Mary Ellen Norton, marketing director of Westfield Citrus Park mall. "I see more people and more shopping bags," so they are buying.
This is the stage where shoppers and retailers play a form of Russian roulette. Shoppers hold out for deep price cuts, hoping stores get the shakes over being stuck with unsold goods. Retailers, who approached the season with modest expectations and thinner inventory, have stuck to planned-in-advance sales events to protect profits.
The sense of urgency, however, is more pronounced among online retailers, who just emerged from a series of record-setting $600-million sales days. While expected to account for 7 percent of all holiday merchandise sales this season up 18 percent from last year, online shopping sites fight a calendar that should make Tuesday their busiest day of the year. That's when most free-shipping offers for pre-Christmas delivery end.
However, the big holiday money is in stores. Only 5 percent of orders topping $500 will be placed online, according to the Conference Board, and 30 percent of online shoppers spend less than $100.
In store ads this week, the magic motivational numbers jumped from the 25- to 30- percent-off range to 40 to 50 percent.
But the sales events typically are traffic builders that last a day, reward charge card customers and coupon clippers, and often don't apply to all merchandise.
"Retailers are so focused on holding prices that they're not motivating shoppers to get out there until the very end," said Britt Beemer, an Orlando retailing consultant. "Because Christmas falls on a Monday, they're misjudging how much business they'll do the last weekend. That Sunday is going to be a mouse. People will be at family events or traveling to them."
Overall, this season is following a script retailers wrote months ago. The National Retail Federation forecast a 5 percent gain to $457-billion in merchandise sales. That's a slightly smaller gain than last year's 6 percent as the fallout from a housing sales slowdown begins to affect consumer spending.
High gas prices and rising housing costs are big reasons why Wal-Mart Stores Inc., which is more reliant on working-class shoppers, all but wrote off the season. The chain reported its first same-store sales decline in a decade for November, then forecast a meager 1 percent gain for December.
But most retailers are counting on others to carry the season.
Leo J. Shapiro & Associates Inc., a Chicago research firm, provided a basis for retailers to hold prices.
Surveys found 60 percent of shoppers plan to spend the same or more on holiday gifts this year, up from 52 percent in 2005.
"That's an 8 point swing that has held firm since August, so consumers are telling us this should be the best holiday season in five years," said George Rosenbaum, chairman of Shapiro, which advises department stores and specialty chains such as Linens n' Things.
"People manage their budgets differently because of the housing situation. They make fewer big purchases like furniture, major appliances or cars. But they still spend freely on day-to-day needs."
One exception: robust sales of big-ticket HD TV sets.
"That's why sets had to be promoted at irresistible prices," Rosenbaum said.
Indeed, Best Buy on Tuesday reported depressed third-quarter earnings. The chain blamed it on cutting TV set prices to respond to Wal-Mart.
Mark Albright can be reached at email@example.com or (727) 893-8252.