NEW YORK – Consumers who have benefited from bargain basement prices in the past week ain't seen nothing yet.
Retails who discounted more than for any holiday season in recent memory are now set to slash prices even more than usual in the traditional post-Christmas sales -- threatening to erode further already thin profit margins. And the selection of merchandise on special offer is also set to be much wider than in past years.
Businesswear retailer Brooks Brothers, recently bought by Italy's Luxottica Group SpA, and luxury department store company Neiman Marcus Group Inc. have already begun to advertise post-Christmas sales in newspapers. And May Department Stores Co.'s Lord & Taylor mailed coupons offering its customers an extra 20 percent off sale and clearance items from Dec. 26 to Dec. 28.
Shoppers have already been stunned by discounts this year, boasting about the deals at such stores as Gap Inc.'s Old Navy, where some bought T-shirts for $1.99 and heavy jackets for $6.99. Some handbags at Federated Department Stores Inc.'s Macy's flagship store at New York's Herald Square were slashed in half, and leather planners were selling for $12, a third of their regular price.
Some shoppers said they were ready for what they expected would be even better prices after Christmas.
Shopping at Macy's at Herald Square, clerical worker Theresa Spivey bought a snow globe and a plate for $20, lower prices than she had seen advertised.
"I've been reading that sales are slow, so I think there are going to be great sales after Christmas," said Spivey.
Some said they were holding out until after Christmas for better bargains on goods they were buying for themselves.
"Sales are already very good, but I definitely plan on shopping after Christmas." said Mike Long, on vacation from Ireland.
"The deals will probably be about 50 percent off," Long said. "I'm looking for a leather jacket."
But what's good news to consumers is bad news for retailers, as the need to cut prices will likely eat into their already dwindling profits or lead to widening losses.
"Post-Christmas discounts will clearly be aggressive this season," said Jeff Klinefelter, an analyst at US Bancorp Piper Jaffray.
Klinefelter said that with retailers desperate to unload seasonal goods such as coats and sweaters even at a loss, the post-Christmas season always offers huge discounts in the range of 50 percent to 75 percent. He said he expects discounts to be at the higher end of that range this season.
But the big difference this year, he said, is that with retail sales flat, stores are stuck with more excess inventory than usual, meaning that consumers are likely to find a better selection of products in stock.
"There will be deeper product availability this year," Klinefelter said, adding that retailers cut inventory earlier in the year in anticipation of sluggish sales, but that sales ended up being lower still.
In addition, some retailers were already advertising their post-Christmas sales over the weekend, when Christmas shopping was still going on.
Klinefelter said it makes sense that retailers such as Brooks or Neiman Marcus, both of which were already advertising their post-Christmas sales, would offer heavy discounts because stores aimed at adults depend more on discretionary spending, most impacted during a recession.
Officials for Brooks and Neiman Marcus were not available to comment.
"These retailers want to be on top of consumers' minds," Klinefelter said. "It's recognition of this year's rapidly deteriorating retail environment for older consumers."
He said discounts would hurt retailers' fourth quarter earnings, but that he expected results to improve in the first quarter of 2002 as stores have already begun to manage their inventory more tightly.
"It will also probably be the most promotional Christmas on record," said Kurt Barnard, president of Barnard's retail consulting. "It's been very sale oriented."
Sears Roebuck & Co. will offer 50 percent off most winter apparel this weekend and zero percent financing on some appliances until 2003, with newspaper circulars to be distributed mid-week with the slogan, "The Best Time to Buy."
But Sears spokeswoman Jan Drummond said the company has been offering similar discounts and using the same slogan for the past few years.
"The entire season has been more promotional than usual, but post-Christmas is about the same," Drummond said.
She said that the company knew that the second half of 2001 would be difficult and began adjusting inventories appropriately over the summer.