Interviews

Stores Offering Deep Discounts After Christmas

Retail expert Burt Flickinger weighs in

 

This is a rush transcript from "Your World," December 26, 2011. This copy may not be in its final form and may be updated.

LORI ROTHMAN, GUEST HOST: Well, to retail guru Burt Flickinger now, who says these are looking more like desperation discounts.

Burt, it’s great to see you.

And I will tell you, I woke up this morning with an e-mail box full of deep discounts, not from just average stores, from like the big luxury retailers, Saks, Bloomingdale’s.

Are they desperate?

BURT FLICKINGER, MANAGING PARTNER, STRATEGIC RESEARCH GROUP: They’re desperate, Lori. With the warmer weather the last few months they have not been able to sell coats, sweaters, a lot of fleece. So they have to move that merchandise now. Their year-end is up and they are under profit pressure and top-line pressure too.

ROTHMAN: Can we make it up just today, this mega-Monday.

The weather, it got colder, as we just heard from Deidra. There is no football today. We have had an extra Saturday in the shopping season and no Northeast blizzard, as we had last year.

FLICKINGER: All those things will work well -- $30 million a minute in sales. We will exceed over $25 billion today. As you and Deidra referenced, it will be one of the top three days of the holiday season, very similar in sales almost to Black Friday, so it should be very, very strong, as you’re saying.

ROTHMAN: OK, very, very strong compared to last year, because we know that we started out the shopping season with a big pop. Black Friday was strong, but then there was a lull, very lackluster numbers coming through those ending weeks in November and through December right now. So how will we end the year vs. last year?

FLICKINGER: Better because of the weather, also better because of the extension on the payroll tax. So a lot people were postponing purchases and figuring they have would less income in the beginning of the year. Now that is a little bit of a supplement, so people will spend more, feeling a little better about their income situation.

ROTHMAN: That is an important point you’re making about Congress. The economy as a whole is tough. Unemployment is stubbornly high. How much pent-up demand was there, where people were basically prioritizing and saying I’m going to wait until Christmastime, until holiday time to spend my dollars which are very, very -- not as free-flowing as I would like them to be?

FLICKINGER: Lori, the last few weeks, people waiting, Hanukkah, Christmas, Kwanzaa, spend for family and friends but maybe not for himself or herself.

So people who wanted to get a gift for oneself decided at the last minute and also are looking for deeper bargains as you referenced. They have desperation discounting. And the shoppers outsmarting the stores and using their mobile devices to comparison shop on land vs. online and know that the longer they wait, the more they will save.

ROTHMAN: I have to wonder if the retailers will be able to turn a profit considering these deep discounts and pressure on margins.

FLICKINGER: Great point, Lori. Best Buy missed earnings.

ROTHMAN: And missed inventory. That was amazing last week. People couldn’t get their stuff. That was such a bad move by Best Buy.

FLICKINGER: And as the professor from University of Memphis said from the philosophy department, big black eye for Best Buy forever and a lot of shoppers won’t go back.

Target missed key deliveries. Wal-Mart’s Web site crashed. What we’re seeing is a lot of shopper dissatisfaction for the retailers that ramped up too quick on bricks and clicks trying to compete with Amazon and Zappos, where the traditional standbys, the L.L. Bean, the Lands’ End, J.C. Penney, consistently high customer service satisfaction.

ROTHMAN: Quick last point, Burt, returns, is that going to be a bummer as well?

FLICKINGER: Double digits, Lori, 9.9, by 10 percent-plus.

ROTHMAN: All right, Burt Flickinger, pleasure. Wonderful to talk to you.

FLICKINGER: Great to team up.

ROTHMAN: All right, happy holidays to you.

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