Originally created 12/13/04

Shoppers flock to stores this weekend

NEW YORK - With less than two weeks of shopping left until Christmas, the nation's malls and stores stepped up discounts over the weekend, but business appeared to be mixed, according to analysts.

Wal-Mart Stores Inc. - which became more aggressive on pricing after a disappointing start to the holiday shopping season - continues to struggle. The Bentonville, Ark.-based retailer said on Saturday that for the week ended Friday, sales of winter merchandise were below expectations, and its general merchandise business was not as strong as food sales. However, the world's largest discounter is still sticking to its December sales forecast.

Sears, Roebuck and Co., which plied shoppers with early bird specials on Saturday, reported "good customer traffic," according to Bill Masterson, a company spokesman.

Meanwhile, business at luxury stores continued to be robust, with designer handbags, jewelry and items like $1,200 massage chairs being snapped up by well-heeled shoppers.

Karen MacDonald, a spokeswoman at mall operator Taubman Centers Inc., said business on Saturday at luxury chains was up in the high single-digit to double-digit percentages from a year ago. For the rest of the merchants, sales were even with last year or rose a modest single-digit percentage from a year ago.

"Retailers are all revved up, all ready to go, and the consumers are just taking their sweet time, walking around, checking out items, but not buying," said Marshal Cohen, senior industry analyst at NPD Group Inc., a market research company based in Port Washington, N.Y. He checked out malls in New Jersey, Pennsylvania, and Connecticut over the weekend, and noted that traffic was disappointing.

He added, "For the luxury market, it feels like Christmas, but to everybody else - the midlevel and lower-end customer - it is not going to be a great Christmas."

Ellen Tolley, a spokeswoman at the National Retail Federation, estimated that traffic will probably be up only slightly this past weekend from a year ago. She believes that at this point, shoppers have done less shopping than a year ago. She blamed it in part on unseasonably warm weather, which tempted shoppers to turn to outdoor activities, and the increasing popularity of gift cards, the bulk of which are purchased during the last few days before Christmas.

After a disappointing start to the holiday season, merchants have seen a modest pace in business since, and were relying even more on a spending splurge this past weekend to recoup lost sales and meet their holiday sales forecasts. Last year, the second Saturday before Christmas was the fifth busiest day of the year, according to the International Council of Shopping Centers.

Still, Tolley expects the nation's stores are "on par" for a moderate holiday season, sticking with the trade association's forecast for a 4.5 percent gain in total retail sales, which exclude restaurant and auto sales.

Tolley noted that the holiday season, like other years, will be decided at the last minute, and is pinning her hopes on procrastinators, who are waiting for better deals.

"I always wait to the last minute, though I keep a list in my mind," said Mariana Jark, who was among the crowds outside the FAO Schwarz store in Manhattan on Saturday. She noted that she can get better deals on holiday gifts like music, DVDs and books if she postpones her shopping.

Meanwhile, at a Dillard's Inc. department store in Little Rock, Ark., Amber Herring was clutching shopping bags from a half dozen different stores. The bags were full of items she bought in October and was ready to return.

"I'm returning to get the better deals," she said. "I bought before and now I'm bringing them back to get the cheaper price."

Herring said she tried to get her shopping done by October, but noticed more deals as the holiday season went on, specifically on shoes and coats.

While the economy has seen improvement, shoppers are still frugal. Although gasoline prices have fallen recently, they are still high, and consumers, particularly low and middle-income Americans, have cut spending on clothing and other nonessentials. They're also nervous about the job market, whose improvement has been volatile.

Still, in an improving but challenging economy, stores entered the holiday season with fewer discounts than a year ago. But that approach is unraveling. Before the Thanksgiving weekend, the level of price cutting was 5 percent below what it was a year ago, according to John Morris, an analyst at Harris Nesbitt who analyzed sales racks at 18 different mall-based apparel stores. After a disappointing Thanksgiving weekend, retailers accelerated discounting. Before this past weekend, price cutting was 7 percent higher than a year ago, he said.

This past weekend, AnnTaylor offered 25 percent off everything cashmere, while AnnTaylor Loft, its less expensive division, had 25 percent off all accessories. At the Macy's Herald Square store in Manhattan, there were plenty of 50 percent off signs throughout the store.

Still, analysts noted that most stores are still trying to be disciplined, not wanting to hurt profit margins.

"Retailers have played their next card, and are now waiting to see what the consumer does," Morris said.

The nation's retailers may have to blink again and ramp up discounting even more after this weekend, given that consumers still remain tightfisted, as evident in the malls.

Sandra Hitt, of Arkadelphia, Ark., who was at the Park Plaza Mall in Little Rock, Ark., on Friday, said she wouldn't spend more money this Christmas than she did last year, and is sticking to a tight budget.

"I had a bracelet in my hand in the other stores that was $2 and I put it down," she said." It's easier for me not to spend than to spend it."

Pam Whitney, a single parent with two teenagers who was shopping at a Wal-Mart Supercenter outside of Rochester, N.Y., said she too plans to spend the same on holiday gifts as a year ago.

"I think money doesn't go as far, things are more expensive. It's just a fact of life for me," she said.

Still, one of the big bright spots this holiday season is retailers' robust business in gift cards, which do not get recorded as sales until they are redeemed.

David J. Contis, executive vice president and chief operating officer of Santa Monica, Calif.-based Macerich Company, which operates 62 malls in the nation, reported that gift-card business soared 40 percent in November compared to a year ago.

"That is fundamentally changing" our business, pushing sales into the latter part of December and into January, he said.


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