New York – This past holiday season, retailers were prepared to do battle with consumers’ penchant for holding out for the lowest possible price. In the end, the big stores lost.
Merchants successfully started the season with big discounts and expanded Thanksgiving- weekend hours – some malls and stores even pulled all-nighters to make it more convenient for time-stressed consumers to shop. But December sales results released Thursday showed that procrastinating consumers forced retailers to rachet up those discounts more than expected right up to the last days of the season, costing the stores sales and profits.
Analysts predict the struggle will continue in 2007 as an uncertain economy is making consumers cautious.
“There was no passion for shopping this holiday season,” said C. Britt Beemer, chairman of America’s Research Group, based in Charleston, S.C. “When you haven’t got that passion, price was the motivator.”
The December disappointments cut through all categories, though apparel sellers particularly struggled with depressed sales of winter wear amid mild temperatures. That could be a harbinger of weak profit reports when retailers release their fourth-quarter results next month. A number of retailers, including Zale Corp., BJ’s Wholesale Club Inc., Gap Inc. and AnnTaylor Stores Corp., already cut their profit outlooks Thursday as they were forced to slash prices to lure shoppers.
Wal-Mart Stores Inc. posted better-than-expected results for December following a dismal November, but the discounter’s overall holiday season was still its worst ever, analysts said.
“The season depended not on what the current economic conditions were but what consumers perceived,” said Michael Niemira, chief economist at the International Council of Shopping Centers. He noted that while gas prices declined and the housing market’s slump appeared to be leveling off, “these concerns were pretty much ingrained in the consumers.”
