Retailers and direct marketers of all types unleashed huge price cuts Wednesday, from semiannual storewide sales to deep designer discounts of 40 to 70 percent off. As expected, the hordes took the bait.
Shopping malls and stores reported huge crowds Wednesday, buoyed by tourism and those consumers off from work or school, the chance to redeem gift cards for merchandise and the bigger bargains.
At Woodfield Mall in Schaumburg, Ill., one of the largest shopping centers in the country, Crate and Barrel, which is running a storewide sale, had 150 people waiting in line for it's 9:30 a.m. opening. The first in line arrived at 7:15, but the earliest shoppers arrived at 6 a.m. for the J.C. Penney opening. The mall is owned by Taubman Centers.
At the Brooks Brothers flagship on Madison Avenue in Manhattan, "It looks like it will be a very strong day," Lou Amendola, the retailer's chief merchandising officer, said Wednesday, when the chain broke its regular-price posture by launching a semiannual sale offering 25 to 40 percent off the entire store. "It really seems to be less about individuals coming to shop for themselves and more about parents and their kids shopping as families," Amendola added.
"Of course it's going to be busy. The question is how busy," said one department store executive, who requested anonymity.
Eighteen percent of America's consumers were planning to shop Wednesday, according to a telephone survey of 510 men and 508 women in the continental U.S., conducted by Opinion Research Corp. from Dec. 13 to 16 and commissioned by the International Council of Shopping Centers and UBS Securities.
"Gift cards have transformed the holiday shopping landscape and they have extended holiday shopping well past Christmas Day," Michael P. Niemira, ICSC's chief economist and director of research, said in a statement. "Dec. 26 begins that new phase of the holiday shopping season."
Apparently, retailers could use it. Investors weren't happy about Wednesday's reports on weak holiday season sales, a jump in oil prices and a lackluster S&P home price survey, but managed to keep the day's trading in the black.The Dow Jones Industrial Average was up 0.02 percent to close at 13,551.69. Trading on the Nasdaq gained just 0.4 percent to 2,724.41, while the S&P Retail Index fell by 1.24 percent to 414.24.
Few retail stocks showed gains following Wednesday's trading close. J. Crew Group was an exception, rising 0.49 percent to $51.38 in trading on the New York Stock Exchange. Talbots Inc. was unchanged at $12.84.
Most major retailers saw share price declines, however. Macy's Inc. fell by 3.92 percent to close at $25.95, while J.C. Penney Co. Inc. fell 3.05 percent to $44.45. Gap Inc. dropped 2.51 percent to end the day at $21.32. Teen retailers also didn't fare well, with Abercrombie & Fitch Co. down 1.56 percent to $82.54 and Aéropostale Inc. losing 1.47 percent to $27.46.
Even high-end retailers lost ground, with Saks Inc down 2.95 percent to $21.35 and Nordstrom Inc. losing 2.95 percent to $36.54.
The discounters also ended the day down, with Kohl's Corp. falling by 2.48 percent to $45.25 and Target Corp. down 2.5 percent to $51.16. Wal-Mart Stores Inc., which generally has performed well this holiday season, slipped just 0.74 percent to close at $48.38.
According to a recent NPD poll, 61 percent of consumers gave gift cards this year. "We're seeing less impulse, less self purchases and less actual purchasing of products," Marshal Cohen, chief industry analyst at The NPD Group, said. "That's because consumers are buying just gift cards instead of gifts. Actual shopping has been cut down to a bare minimum. Even with all the last-minute deals, I don't think that was enough to push the final numbers to great heights. But I think after the dust settles and the gift cards are redeemed...we'll look back and see that holiday is just fine...the consumer didn't disappear."
Underscoring the significance of gift cards, Taubman Centers reported that at its Dolphin Mall in Miami on Wednesday, about 20 percent of the sales were off gift cards, with electronics, athletic wear and boots being the hottest categories. Of all the transactions, 70 percent were new purchases and 30 percent were exchanges or returns.At Taubman's International Plaza in Tampa, Fla., approximately 25 percent of the transactions Wednesday were off gift cards, few returns were noticed and hot sellers were computers, the iPhone, games and apparel.
Price cutting, however, is what really set the tone nationwide. Unfurling a fresh round of cuts the day after Christmas has become an industry standard. Retailers run clearances to get fall goods off the shelves and make room for spring receipts, and hope to end the year with a final surge. This year, in particular, they could use a lift after experiencing a season of small gains at best, with the exception of last weekend and Thanksgiving weekend when business was robust.
Among the plethora of retailers unfurling discounts, Saks Fifth Avenue promoted up to 70 percent off designer labels, including a Carolina Herrera laser-cut wool top marked down to $866.95 from $2,890; an Ermenegildo Zegna brushed cotton men's pant marked down to $121.45 from $325, and Dolce & Gabbana men's Ts marked down to $53.95 from $145.
Vivre, the luxury catalogue and Web site, advertised a winter sale of 40 percent off on items from such designers as Oscar de la Renta, Vera Wang, Michael Kors and Roberto Cavalli. In The New York Times, Lord & Taylor advertised 50 percent off much already-reduced merchandise, and Bloomingdale's advertised total savings of 60 to 80 percent off certain fashion in the New View, Y.E.S. and Sutton departments.
On the mass level, Lilian Vernon offered 25 to 85 percent off many products. At Target, intensified discounting was cited by Standard & Poor's. "We anticipate higher markdowns on clothing and home categories in current quarter and believe a projected slowdown in consumer spending will further skew sales toward lower-margin merchandise categories next year," S&P said in a report. S&P said Target sees December same-store sales between 1 percent up and 1 percent down, below a prior 3 to 5 percent growth estimate. As a result, S&P cut its fiscal '08 estimate by six cents to $3.35 and fiscal '09 estimate by 25 cents to $3.85.
On the other hand, Amazon.com proclaimed the 2007 holiday season its best ever, with its busiest day being Dec. 10. "On that day, Amazon customers ordered more than 5.4 million items, which is 62.5 items per second," the company said. In apparel and accessories, Amazon's top sellers included Kenneth Cole Reaction men's Eden wool peacoat, Gruppo Italiano women's cashmere-lined leather gloves and Red Moon women's long-sleeve cashmere turtleneck.