Shoppers’ search for bargains during a recession may be disrupted by wintry weather in parts of the U.S. as the holiday-shopping season enters what may be a make-or- break weekend for some retailers.
Today may be the busiest shopping day of the holidays, said Michael Niemira, chief economist at the International Council of Shopping Centers. Shoppers who have waited for deeper discounts probably will be rewarded as retailers seek to clear inventory and salvage what may be the worst season in 40 years, even though their fourth-quarter profits may suffer as a result.
Snowstorms and freezing temperatures might put a crimp in those plans, said Scott Bernhardt, operating chief of Planalytics Inc., a Wayne, Pennsylvania-based weather consulting firm.
“Saturday has become more important from a weather perspective because a lot of major markets lost Friday, and Sunday we have another storm coming in,” Bernhardt said. “It’s so close to Christmas, shoppers are running out of time.”
Macy’s Inc., the second-largest U.S. department-store chain, is offering $800 sapphire or ruby and diamond rings for$249 during part of the day. Gap Inc.’s Banana Republic chain is advertising clothing for as much as 60 percent off. A $2,100 Marc Jacobs dress was listed at $629.95 on Saks Inc.’s Web site.
“This year, you have many retailers just trying to clear inventory to raise cash rather than to achieve highest profit,” said Linda Tsai, a retail analyst at MKM Partners LLC. “It has the potential to create havoc for retail and considerable bargains for consumers over the next few weeks.”
‘Largest Weekends’
The Standard & Poor’s 500 Retailing Index has shed 31 percent this year, with only two of its 27 companies gaining. The index doesn’t include Wal-Mart Stores Inc., the world’s largest retailer, which rose 33 cents to $55.74 yesterday in New York Stock Exchange composite trading. The stock has gained 17 percent this year.
“I do believe this is going to be one of the largest weekends in retail history,” Toys “R” Us Chief Executive Officer Gerald Storch said yesterday in an interview. “There’s a lot of pent-up demand, and there’s going to be fantastic deals.”
Cash-strapped shoppers grappling with shrinking housing prices and rising unemployment have cut back on non-necessities, pushing the U.S. economy into a recession. Consumer spending accounts for more than two-thirds of gross domestic product.
“We’re buying less stuff for each other and just overall,” Dennis Decker, a 47-year-old landscape architect, said today outside a Kohl’s in Douglasville, Georgia. “Usually I buy stuff for my sisters. This year I’m just going to make them some Christmas ornaments.”
Las Vegas Snow
At least a dozen retail chains, including Circuit City Stores Inc., have sought bankruptcy protection this year. A credit squeeze may result in thousands of locations being closed in 2009, Gregory Segall, a managing partner at buyout firm Versa Capital Management Inc., said Dec. 17.
A storm dropped snow on Las Vegas before sweeping across the country to hit Chicago, Milwaukee and Detroit. New York City and its suburbs got several inches, while Boston and Connecticut were expecting to see a foot or more of snow, with more on the way. Temperatures may fall below zero Fahrenheit (-18 Celsius) in the Midwest later this weekend.
The average American has finished almost two-thirds of his or her holiday shopping, according to a National Retail Federation survey conducted Dec. 16 to 18 by BIGresearch and released yesterday.
Black Friday
For the last few years, Black Friday, the day after Thanksgiving and the unofficial start to the holiday-shopping season, has been the biggest shopping day in sales, said Ellen Davis, an NRF spokeswoman. This year, with people waiting until the last minute to make many purchases, today is “incredibly important,” she said.
Alex Galvez, 28, an automotive technician who works in Long Beach, California, said he lost half his income this year. He was shopping for his nephews today at the Westfield Santa Anita Mall, in Arcadia, California.
“In past years, we’d probably get 10 gifts for each of our nephews,” he said. “This year it’s probably one.”
The ICSC has estimated that in November and December, sales at stores open at least a year may decline as much as 1 percent. That would be largest drop since at least 1969, when the New York-based trade group starting tracking data.
“It’s sad for the kids,” said Galvez. “They’re used to getting a ton of gifts.”
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