Last-Minute Shoppers Not Enough for Struggling Retailers
NEW YORK – Shoppers flocked to malls Monday to take advantage of deep discounts the day before Christmas, but crowds were thinner than expected and the mood more subdued, casting a cloud on a retail season already expected to be the weakest in at least a decade.
The terror attacks, economic jitters and unseasonably warm weather have kept customers away from stores, whose sales were already hurt by a consumer spending slowdown over the past year.
Merchants are desperately counting on more first-time procrastinators like Marcia Maxwell from New York City and Pat Sterle from West Bend, Wis., both of whom hadn't made holiday shopping a top priority earlier in the season.
"I just wasn't in the mood," said Maxwell, who bought software games for PlayStation2 and boardgames at Toys R Us, as well as Banana Republic sweaters on her $1,000 budget, about $500 less than a year ago.
"All of a sudden it wasn't so important to get the shopping done," said Sterle, who was one of the few shoppers at a Target store in Milwaukee, Wis., on Monday.
Even seasoned last-minute shoppers noticed that things were different.
"My procrastination has paid off," said Judy Cahalan, from Lakeville, Minn., who was glad she didn't have to brave crowds typical of Christmas Eve at the Mall of America, the nation's biggest mall.
Christmas Eve is not typically a big sales generator, accounting for less than 4 percent of overall holiday sales, according to C. Britt Beemer, chairman of Charleston, S.C.-based America's Research Group. But he noted that the holiday will be even less significant this year because more people will be focused on attending church services and spending more time with family.
The tempered spending follows a disappointing sales performance and shopper turnout at the nation's malls this weekend, despite heavy discounting and advertising blitzes.
Merchants typically see a sales surge in the final seven days before Christmas, whose share has been increasing over the past decade. However, customers remained frugal, scouring for bargains and continuing to focus on home-related merchandise, like DVD players, game consoles and home furnishings.
Consequently, Jeff Feiner, managing director of Lehman Brothers, now believes that most of the 22 retailers he tracks will not meet their most modest sales forecasts. Furthermore, even for those that do, their sales will come at the expense of heavy discounting, further eroding profit margins.
He added that his holiday forecast of a 2 percent sales gain may now be too optimistic. Instead, the company's profits will probably be down as much as 5 percent to 10 percent, Feiner said.
Still, Feiner believes that consumer spending will improve, particularly in the second half of 2002.
With many retailers realizing that the pre-Christmas season is a wash-out, merchants are now turning to the last week of December to recoup some of the lost holiday sales.
Already, some merchants like Eddie Bauer was offering post-Christmas discounts on Christmas Eve.