Starting with the Thanksgiving Day, consumers have focused mostly on promotional deals and have made fewer impulse purchases as they are still concerned about the state of the economy. Retailers are in fact driving traffic to their stores through much targeted promotions that ultimately will lead to reduced profit margins. This year, it appears that the Black Friday and Cyber Monday surveys could not provide a clear picture about the retail sales numbers for the entire holiday season. In part, that could be attributed to a warm November weather, which kept consumers from buying winter clothes. US retailers have decided to extend discounts on computers, toys and clothes beyond Christmas to attract consumers who held out for lower prices and have gift cards to redeem.
For instance, Best Buy trimmed the price of a Dell Studio 17-inch notebook computer to $700 from $780 and they offered a Lenovo netbook for only $197. Toys “R” Us shoppers who bought a Nintendo Wii video game could have bought a second game for half price. Wal-Mart, which started cutting holiday toy prices on September 30, is trying to keep consumers coming back by offering a $50 gift card on purchases of Microsoft’s Xbox 360 players through January 1. Wal-Mart also said that it would discount electronics and toys from Saturday through New Year’s Day, offering deals that included an eMachines netbook computer for $228. Promotions intensified especially after last weekend’s East Coast snowstorm when retailers understood that those days were going to hurt Christmas sales significantly.
The National Retail Federation is still holding to its forecast for a 1 percent drop in holiday sales. The International Council of Shopping Centers reiterated on December 22 its forecast for a 2 percent increase in sales at stores open at least a year in December. They released the forecast after they reported that the storm slowed growth to 0.4 percent year over year in the week ended December 19. “We expect a strong December 26 shopping day since it falls on Saturday this year, which should close out December with a bang” principals at Retail Eye Partners wrote in a report.
Fifty-five percent of mothers who shop at Wal-Mart said they like to receive gift cards over the holidays because it allows them to shop the after-Christmas savings, according to a survey conducted by BIG Research. Two out of five moms planning to use their gift cards right away say they will shop right after Christmas to get the best prices. Saks, the New York luxury retailer, said it was offering up to 70 percent off from 8 a.m. to noon, after which the discounts will revert to 40 percent. JC Penney said it would open stores at 5 a.m., its earliest opening ever for the day after Christmas, and it would offer more than 100 so-called door-busters.
Most of the store chains are looking for people who waited until after Christmas to see if they could manage to find even lower prices. People get tempted to spend gift cards when they have got good offers. Shoppers have been savvier than ever when it comes to price this holiday season and promotions have been needed to get shoppers in. Resisting enticing banner ads from companies such as Gap, which was advertising up to 60% off, many consumers were buying only necessities such as wrapping paper. These days I have noticed very few people carrying multiple shopping bags. If my perception is in fact a national reality, the fourth quarter GDP number will disappoint Wall Street.
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