Holiday Sales Fail To Meet Retailers Expectations Merchants Rethinking Dependence On Christmas

You couldn’t prove the economy is booming by looking at the sales receipts of the nation’s merchants this holiday season.

For the third straight year, sales have failed to meet expectations at many stores. That’s forcing retailers to rethink Christmas, which used to provide up to 50 percent of their annual business.

Among the questions being raised is whether the shopping season - with holiday hype beginning well before Halloween - is just too long.

“There isn’t a sense of a holiday spirit anymore, with people running around buying gifts for everyone,” said Mark Slosberg, a partner at KPMG Peat Marwick in New York. “Times are changing for retailers around the holidays and they need to deal with that.”

For years, Americans overloaded on holiday gifts. Consumers scoured stores looking for electronics, clothes and toys to fill long gift lists.

That voracious appetite for gifts began to dissolve a decade ago. The 1987 stock market crash and the 1990-91 recession made consumers watch their wallets.

Many shoppers never spent freely again, and even have remained tightfisted in recent years despite the best economic conditions in decades.

According to a survey of 1,003 people by Charleston, S.C.-based America’s Research Group, 21 percent of respondents said they were spending less on gifts than they did 10 years ago.

“I think we’re just in the mind-set to be more economical this year,” said Nora Alejandro, of Rio Rancho, N.M. “We’re watching our budget closely.”

Moreover, many consumers now forgo gifts for family vacations or other indulgences, like a day at a spa or a new dishwasher for the home. Money is also diverted to savings or investments, including mutual funds and stocks.

For retailers, the changing pace of the holiday season isn’t easy to digest. Christmas was always the backbone for their year, a time when they could depend on solid sales gains.

“We, as retailers, might be in denial,” said Ed Carroll, executive vice president at Milwaukee-based Carson Pirie Scott department stores. “Christmas is not what it used to be.”

Devising a plan to lure shoppers year-round is going to be a top priority for many store owners. Already holidays like Valentine’s Day and Mother’s Day bring in traffic, but hardly enough to supplant Christmas.

“Christmas used to bail out retailers for the year, and now we see that can’t work anymore,” said Jeffrey Feiner, managing director at Lehman Brothers Inc. “They need to balance the year in a better way.”

Also under consideration is shortening the holiday season from the lengthy, drawn out two-month event that it’s become.

“You can’t promote Christmas in September and expect consumers to stay interested in it through December,” said Carl Steidtmann, chief economist at Management Horizons, the consulting unit of Price Waterhouse.

But don’t expect Christmas craze to just disappear. There are plenty of shoppers who still show no restraint when it comes to gift-buying.

“I find it, I buy it,” said Jen Stafford, a Chicago college student. “It’s too much of a hassle to do it any other way.”

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