Consumers are expected to pack stores and malls this weekend for a final stretch of shopping before Christmas, but they probably won't spend enough to turn around what has been a difficult holiday season for retailers.
Desperate retailers trying to clear out racks of merchandise will pull out all the stops to squeeze that last dollar from shoppers in what has already been a season of steep discounts. JCPenney will slash prices as high as 70 percent on some items, while Loehmann's is offering 25 percent off entire purchases through Christmas Eve. Macy's will open 13 stores throughout the country for 24 hours, including Tysons Corner, Va., in the Baltimore-Washington area.
The cut in prices probably will come at the expense of revenue, but retailers fear consumers will clamp down even more on spending after the holiday season. Research firm TNS Retail Forward said this week that sales will remain slow next year, and a rebound won't occur until 2010. Best Buy chief executive Brad Anderson said this week that the environment for consumer spending was likely to get worse before anything improves. His statements came after the company reported a 77 percent decline in third-quarter profit.
But lower revenue is better than a rack full of clothes in January, said Bill Martin, co-founder and executive vice president of ShopperTrak, a Chicago firm that follows consumer shopping habits. As banks continue to limit access to credit, retailers will need the cash from sales now to buy inventory for the spring season.
"When inventory sits stagnant, then they don't have cash to go out and buy the spring line. And it just bottles up the whole system," Martin said. "Easy credit is not available, so they're going to have to have cash."
The weekend before Christmas has historically been one of the busiest shopping days of the year as procrastinators rush to buy last-minute gifts and bargain hunters search for late deals. Thanksgiving fell late this year, shortening the shopping season, meaning more people probably will try to cram it in during the next week.
Today, which is dubbed "Super Saturday," is expected to be the second-largest shopping day behind the day after Thanksgiving, according to ShopperTrak.
Most shoppers, however, likely will be carrying fewer bags as they spend less amid worries about job security, weaker stock portfolios and declining housing values.
Jackie Barber started her shopping Wednesday, hitting Marshalls, TJ Maxx and Loehmann's. She expected to shop this weekend and through the week. She normally doesn't wait this late to shop, but she said the economy has her a little anxious. The 55-year-old homemaker who lives in Baltimore is looking for deals and buying only for her nine grandchildren this year.
"I'm waiting for the bargains," she said "The stores are not doing well, so I know there are going to be markdowns.
The National Retail Federation reported this week that 41 million people had not started their shopping yet and only 8 percent are finished entirely. Some people will skip the stores altogether. A separate study by Consumer Reports found that as people deal with money problems, 69 percent of them are limiting their gift giving, making presents or not giving anything.
"I don't believe these last days before Christmas are going to be able to make a substantial dent in the problematic sales season," said Daniel Howard, a professor of marketing at the Southern Methodist University Cox School of Business and an expert on consumer habits. "The country is in the midst of a recession. People are afraid, and when people are afraid they don't spend their money."
Stephanie Phair, 28, said she is not buying gifts this year because she is worried about job security in the shaky economy. Her job has been secure, but she's saving her money to be safe.
"I'm just worried about what could happen," said Phair, who drives an armored truck for a living.
Retail spending was way down last month despite a strong Black Friday, the nickname given for the day after Thanksgiving because it is the day retailers traditionally see their ledgers move into the black. And retailers report that shopping has remained slow this month.
NRF says the holiday season, when most retailers ring up the bulk of their sales for the year, will be the worst in six years. The trade group predicts that holiday sales will increase 2.2 percent to $470 billion, well below the 10-year average increase of 4.4 percent. That's the slowest growth since 2002, when sales rose 1.3 percent. The International Council of Shopping Centers predicts a 1.7 percent sales increase.
"Come January, when retailers report their earnings, I think we're going to see drops like we've never seen before," said Marci Kopacz, national managing principal at Grant Thornton Corporate Advisory and Restructuring Services.
Most analysts expect that post-Christmas shopping, which in recent years has given an extra boost to the holiday season, will be slower this year as people buy fewer items for themselves and gift card sales decline. Gift cards aren't counted as a sale until after they're redeemed. Analysts said fewer people will buy gift cards this year because they can get a better deal on discounted merchandise. Others are afraid to buy gift cards from stores that could go out of business.
Arundel Mills is planning for big crowds this weekend. The Hanover outlet mall will have late hours, gift-wrapping services and door greeters to meet the crowds.
"The last weekend before Christmas has gotten very, very big," said Wendy Ellis, director of mall marketing and business development at Arundel Mills. "We all lead very busy lives these days, and it's not unusual for us to put off shopping until the end of the season."
Wal-Mart will be selling traditional board games such as Candy Land for as little as $5 and will be giving away $50 gift cards with the purchase of a Sony Blu Ray player.
"Now you're getting into your last-minute shoppers," said ER Anderson, a Wal-Mart spokesman. "We'll be ready for them."
Joyce Flayhan, who was browsing books in Marshalls earlier this week, expected to be at a mall this weekend buying clothes from Aeropostale for her kids. The 45-year-old nurse, who lives in Nottingham, said she's cutting back on elaborate gifts this year.
"It's definitely the thought that counts this year," she said. Charlene Wollard, a 36-year-old nurse from Baltimore, hadn't finished much of her shopping this week, either. Wollard said she's a natural procrastinator, but that the economy is making her think even more about what she buys this year. She's only buying for close family and kids. And she's definitely looking for deals.
"Usually if I want it I just buy it," Wollard said as she looked at perfume in Marshalls. "I haven't been that way at all this year."