December 23, 2007 in Business

Merchants still waiting to celebrate

Anne D'Innocenzio Associated Press
 
The Spokesman-Review photo

A shopper looks at discounted rain boots in the Gap store at the Great Mall in Milpitas Calif.
(Full-size photo)

It’s in the cards

Gift cards are encouraging shoppers to delay their buying. Americans will spend $26.3 billion on them this holiday season, a 42 percent increase from $18.5 billion in 2005, according to National Retail Federation.

NEW YORK – Never mind all the pressure this season from the nation’s stores to do holiday shopping early with such tactics as marathon shopping hours and other come-ons. Meghan Donovan is doing it her way.

The San Francisco resident starts her research in early November, thumbing through catalogs, checking out stores and searching online. Then she waits, and doesn’t pounce on anything unless the item is down at least 30 percent.

“I definitely do a lot of research and then narrow it down … I would have spent more money if I shopped earlier,” said Donovan, who started her holiday buying late Sunday night, when the crowds were thinner. She doesn’t plan to finish until this Sunday.

With Christmas just days away, merchants are finding themselves in the same situation as in recent years: waiting for those last-minute shoppers. But based on anecdotal evidence, the ritual of shopping later is becoming more prominent as consumers – under increasing time pressure and armed with the Internet, gift cards and other buying options – want to take more control of the shopping experience.

Exacerbating the problem this year is that Christmas falls on a Tuesday, giving consumers a full weekend to finish.

“What we see in broad terms is that people are less interested in being forced to do something by marketers and retailers and a lot more are interested in managing the shopping and consuming experience themselves,” said J. Walker Smith, president of market research company Yankelovich Inc. “They want to be in charge. It’s not that people don’t want to shop. They just want to shop on their own terms.”

Such changing consumer habits could transform how the nation’s stores operate, for example, expanding shopping hours for the rest of the year, says Michael P. Niemira, chief economist at International Council of Shopping Centers.

Nevertheless, Marshal Cohen, chief analyst at NPD Group Inc., said stores are partly at fault for such delayed holiday buying because, with the exception of some popular items such as Australian sheepskin Ugg boots or Nintendo’s Wii, there’s very little reason for shoppers to run out to stores to buy early. Instead, consumers are buying into general categories such as flat-panel TVs or GPS systems, with no specific brand in mind, so they can wait for the best deal.

“There’s no passion,” for holiday shopping, Cohen said.

The procrastination phenomenon is increasingly frustrating retailers whose efforts to draw customers aren’t working they way they used to.

Big sales in early November – along with the sales bonanza on Black Friday, the day after Thanksgiving – took a lot of thunder out of December, according to Candace Corlett, principal at WSL Strategic Retail. Stores including Toys “R” Us Inc. and Wal-Mart Stores Inc. tried to start the season early with expanded hours and early morning specials similar to those offered on Black Friday, the traditional kickoff of holiday shopping.

Now stores are trying to do the same with the season’s finale, offering marathon hours and other come-ons.

Some are pulling all-nighters. Several Macy’s Inc. stores in the New York metropolitan area, including its flagship, were set to open Friday at 7 a.m. and not close until 6 p.m. on Christmas Eve. Kmart, operated by Sears Holdings Corp., was to open for 64 hours straight beginning at 6 a.m. on Saturday, closing at 10 p.m. on Dec. 24. The holiday 2002 season was the only other time that Kmart pulled an all-nighter.

According to research company ShopperTrak RCT Corp., a lot of business is up for grabs in the last five shopping days of the season.

In an online survey of 63,000 shoppers conducted by NPD last weekend, 18 percent said they hadn’t even started shopping, compared with 11 percent at the same time a year ago; 67 percent had not finished, compared with 51 percent a year ago. The three top reasons shoppers cited were: they were waiting longer for better deals, they had little time to shop and they didn’t know what to buy.

But it’s not just what people are saying in polls; store and mall executives say they see it in the modest crowds after Thanksgiving weekend. According to the International Council of Shopping Centers, sales at stores open at least a year rose a modest 1.4 percent for the week ended Saturday, compared to the previous week.

“It’s maddening from a retail perspective because you are sitting there waiting,” said Ed Schmults, CEO of FAO Schwarz. The iconic toy retailer, which operates stores in Manhattan and Las Vegas, will be open on Christmas for the first time and added a last-minute 25 percent reduction and free standard shipping on orders on fao.com until Tuesday to spark sales.

“People are busier than ever … They’re working longer hours,” said Peter Cobb, co-founder of ebags.com, who’s seeing business surge later.

Improvements in Web sites’ ordering and shipping have pushed back online shopping, because late shoppers feel more confident that their gifts will arrive by Christmas Eve. And shoppers who order late are not being punished for doing so, unless, of course, they want something in limited supply.

According to shop.org, the online arm of National Retail Federation, 68 percent of online retailers polled said they were offering some sort of promotion on upgraded shipping a week before Christmas, dramatically up from 49 percent a year ago. In the past, shoppers would have had to pay a hefty premium shipping fee.

Then there’s the surging popularity of gift cards, which are encouraging shoppers to delay their buying. Americans will spend $26.3 billion on them this holiday season, a 42 percent increase from $18.5 billion in 2005, according to National Retail Federation.

Donovan, the shopper from San Francisco, said she plans to buy gift cards as a last resort if she can’t find anything else.

The problem for retailers is that gift card sales are not recorded on stores’ books until they are actually redeemed.

For some shoppers like Gail Christenson, the holidays mean doing some shopping – including some for her small children – after Dec. 25, when prices get slashed further.

“Kids get too much at Christmas time,” said Christenson, of Albert Lea, Minn., who was shopping at the Mall of America in Bloomington, Minn., this past weekend. “It’s better to shop after Christmas.”

© Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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