Holiday shoppers willing to wait

THE BALTIMORE SUN

Loaded down with shopping bags and with one foot in a brace, Karen Kunze hobbled through Arundel Mills, the sprawling outlet mall in Anne Arundel County, in a frantic rush to buy Christmas gifts for her six kids yesterday. She usually kicks off the buying season the day after Thanksgiving but didn't quite make it this year.

"I just started," she said, slightly out of breath. "It's hard."

Retailers have tried all kinds of tactics to lure holiday shoppers into their stores earlier in the season, putting up decorations as early as October to create a festive mood and offering steep post-Thanksgiving sales. But the message seems to have been lost. Instead of creating early birds, merchants and surveys have found that consumers are consistently waiting longer and longer to buy their holiday gifts.

A big question for retailers - and the economy - looms as the holiday shopping season enters its final week: Are people waiting for bargains, or are they just tapped out?

"There are a lot of reasons," said Billy Digman, manager of Ties, Shirts and More at Arundel Mills. "Money is very tight, people are scared about losing their jobs, a war is going on." His store had an especially slow start this season, although business has started to pick up this week, he said.

A survey released this week by the National Retail Federation trade group and BIGresearch determined that consumers on average had finished about 46 percent of their holiday shopping. At this time last year, they'd finished about 52 percent of their purchases.

In a similar study by America's Research Group, which follows shopping trends, 52 percent of respondents said they didn't plan to finish their shopping until Dec. 24. Last year, 48 percent of people planned to shop that late, and in 2002, nearly 45 percent expected that they wouldn't finish until then.

People who follow the $3.5 trillion retail industry offer a mix of rationales for the sluggish start, including procrastination, economic jitters and the weather: A mild early December delayed a holiday-shopping mind-set and hurt sales of winter wear, some executives said.

"We were wishing it would get colder faster," said William Watrous, who was shopping with his wife, Jennifer, yesterday. The couple just moved to Columbia from Boston and said the temperatures before this frigid week made it hard to get into the holiday mood.

While high-end merchants such as Nordstrom and Neiman Marcus were reporting a strong season, several major national retailers reported tepid sales, including Wal-Mart Stores Inc., Sears, Roebuck and Co. and Federated Department Stores Inc. Among the culprits suppressing shopping: gas prices higher than a year ago, and worries about job security, rising interest rates and high levels of credit-card debt.

Other analysts, however, contend that consumers are getting wiser about late-season discounts and expect price-slashing and deals closer to Christmas.

Sears, for example, plans to give out $10 gift cards to the first 100 customers at its stores at 7 a.m. tomorrow and started an ad campaign with former quarterback Troy Aikman to instruct male shoppers on the "two-minute warning drill" of shopping in the final week. An estimated 21 million men - and 16 million women - have yet to start their holiday shopping, according to the National Retail Federation survey.

"You can always depend on the week before Christmas having last-minute sales," said Ebony Richardson, an administrative assistant from Washington. Around her in Arundel Mills, huge red signs screamed "Sale!" from every other store, staff wore Santa hats and holiday music was omnipresent.

"I think people are waiting for blockbuster sales," said Howard Davidowitz, chairman of Davidowitz & Associates, a national retail, consulting and investment banking firm in New York. "The proof of the pudding is, when sales like this were offered after Thanksgiving, people came out."

Indeed, the holiday shopping season got off to an exuberant start the day after Thanksgiving as shoppers gathered at some stores before dawn, hoping to snatch early-morning bargains. But the performance quickly eroded by the end of that first weekend. Signals since have been mixed: Some chain stores posted disappointing November retail sales, but the Department of Commerce reported Monday that overall retail sales increased a seasonally adjusted 0.1 percent from October to November and 0.5 percent when automobile sales are excluded.

Retailers may have helped create part of the last-minute shopping patterns by promoting discounts that brought people into their stores, creating an environment where people will buy only what's on sale. Wal-Mart and other retailers tried to resist and met disappointing sales when they didn't offer hefty markdowns. After being undercut by some competitors the day after Thanksgiving, Wal-Mart launched an aggressive marketing campaign and slashed prices on some coveted items to win back shoppers.

"The retailers made a calculated decision that the economy was strong enough that they didn't have to cut prices," Davidowitz said. "They were wrong."

Others said retailers are paying more attention to shareholders than to their customers.

"I think too many companies are publicly held," said Britt Beemer, founder of America's Research Group in Charleston, S.C. "They're saying, 'If I have a 1 percent increase in sales and a 10 percent increase in earnings, I'll be rewarded by Wall Street.' We now have Wall Street governing retail strategies."

While some promotions have begun for the coming week, the retail federation expects no greater levels of discounting than in recent years.

"We certainly expect the last week to be very promotional, but many of those promotions will be planned," said Ellen Tolley, a spokeswoman for the trade group.

Despite some weak signals, most analysts are holding to their preseason predictions of a healthy rise in sales compared with last year's, although slightly off from the previous Christmas. The retail federation predicts a 4.5 percent increase in sales compared with 2003, which was up 5.1 percent from 2002.

Some consumers may have just gotten a late start because they were focused more on politics than the holidays as the tense presidential election consumed early November, researcher Beemer said. He believes shoppers finally got serious this week.

"They hit the stores in droves on Sunday," Beemer said. "They realized there's only one week left before Christmas so they better start shopping."

Continued growth in online shopping and gift-card giving may also have skewed shopping later than in past years. Several shoppers interviewed yesterday at Arundel Mills said they did most of their shopping on the Internet and were just collecting the final odds and ends.

And a few said they wait for a reason that discounts or the Internet can't fix: They simply find it excruciating.

"It's an extremely mind-numbing experience," said Paul Kelley, a plumber from Granite in Baltimore County. "I'd rather dig ditches all day than go shopping."

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