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Retailers Hope Sex, Discounts Drive Sales

Sex sells and money talks.

U.S. retailers are banking on those cliches to drive sales this holiday season, with Abercrombie & Fitch Co. — famous for its skin-filled catalogs — turning to scantily clad in-store greeters in a bid to lure reluctant consumers.

If that doesn't work, Kmart Corp. is offering round-the-clock discounts this weekend, the traditional kick-off to the holiday shopping period, staying open 24 hours a day from Friday through Sunday, for the second straight year. The bankrupt retailer needs a strong holiday season as it fights to emerge from Chapter 11 bankruptcy by next summer.

Other retailers are using similar tactics as they try to stir up demand in what analysts expect will be a mediocre holiday shopping season, as a slack economy and waning consumer confidence restrain spending.

"Tomorrow everyone rests and then Friday it begins," said Brian Tunick, specialty retail analyst with J.P. Morgan.

"There's going to be a barrage of door-busters. The consumer feels like they're owed 20 to 25 percent off. The Abercombies are going to try to do what they can to stand out in a very crowded retail environment," he said.

Standing out for Abercrombie & Fitch means catalog models stripped down to their underwear greeting customers when they enter stores. An Abercrombie spokeswoman confirmed the models would be in stores, but referred questions to an outside public relations firm, which did not immediately return a call.

The retailer has drawn some protests over its catalogs, which now come specially wrapped to hide the barely dressed models from young eyes.

While the sexy advertising has attracted plenty of media attention, it has not translated into strong sales for Abercrombie, which has reported seven straight months of declining sales at stores open at least one year.

"If parents were thinking of getting a gift certificate or gift card (for their children), maybe they'll be a little turned off by going to Abercrombie, but the kids themselves will certainly be buzzing about it," Tunick said.

Discounts Abound

For less risque retailers, discounts will be the recurring theme this holiday season as stores battle a weak economy.

Analysts are predicting a mediocre holiday season at best, although a recent upturn in consumer confidence data and a rebounding stock market have somewhat bolstered expectations.

The calendar is also posing a challenge because Thanksgiving falls six days later than it did last year, meaning fewer prime holiday shopping days.

"Retailers will have to be very creative to get all the procrastinators ... into their stores," Tracy Mullin, president and chief executive of the National Retail Federation, said Tuesday. "They will be highly promotional but the sales events this year will be planned and item-specific as opposed to the sweeping storewide sales we saw last year."

That could help retailers keep profits up even if sales remain sluggish.

Troy, Michigan-based Kmart, which blamed last year's weak holiday sales in part for its decision to file for bankruptcy protection in January, plans to stay open from 5 a.m. on Friday through 10 p.m. on Sunday.

Target Corp. has moored a boat off the coast of New York City, where it is selling its top 92 gift ideas. The retailer, which has yet to open a store in pricey Manhattan, has hired motorcycle riders clad in the red Target logo to promote the floating store.

Aside from those few novel gimmicks, retailers were sticking with more mundane offerings like early-bird specials and extended hours, said Tom Holliday, president of the Retail Advertising and Marketing Association, a unit of the National Retail Federation trade group.

"The competition is, who can open the earliest and who can offer the lowest prices?" he said.

Even at Abercrombie, money may trump sex as shoppers hunt bargains in malls filled with teen-oriented stores.

"These models will certainly lead to people coming by the stores, but we'll have to but wait and see if it ultimately translates into sales," J.P. Morgan's Tunick said.

"They'll be fighting against Pacific Sun, American Eagle, and to some degree, Gap. All the other retailers will have some sort of (discount) program."