Desperate retailers seek holiday rescue
- Source: Global Times
- [01:00 November 23 2009]
- Comments
US retailers are taking desperate measures to spark holiday sales in the face of what promises to be another troubled year-end shopping season.
US merchants are furiously working to ramp up consumer interest ahead of "Black Friday" this week, the day after the Thanksgiving Day holiday that marks the traditional kickoff of the holiday gift season.
Clothing retailer Gap has started early with 25 percent discounts, while Wal-Mart and Target are offering online shoppers free or discounted shipping on many items. JC Penney is boosting its Black Friday promotions and will open its doors at 4 am for the best deals.
Analysts say retailers are struggling to find the right balance of inventories and discounts, while cautious consumers are hesitant on how much and when to buy.
Steven Dennis, executive-in-residence at Southern Methodist University's JC Penney Center for Retail Excellence, said price cuts may be deep but are not as broad as expected.
"I think most retailers are desperate for market share," he said. "Everyone seems to have the view that business is going to be flat, and it is a battle for market share."
But Dennis said retailers are not in the dire position they were last year, when they had large amounts of inventory. So price cuts will mainly be on a few high-profile items to get consumers into the store.
Diane Swonk, chief economist at Mesirow Financial, said retailers who don't join the heavy discounting "might be disappointed with the results."
"Consumers were already playing chicken with retailers to get better discounting ahead of the recession, and there is no reason to believe they won't be even more cautious about paying full price now, given the sorry state of their balance sheets."
A survey by Visa USA found that consumers plan on spending $161 less on holiday shopping than last year and $368 less than they planned two years ago.
In one sign of the times, retailers have brought back the layaway plan, enabling customers to put down a deposit to hold merchandise until the full amount can be paid.
One reason for this is that consumers are stretched and may have less access to credit.
A survey for the National Retail Federation found that 24.9 percent of holiday shoppers will pay for gifts this year with cash, up from last year's 22.8 percent. Also, 42.5 percent of shoppers plan to pay primarily with debit or check cards, and the use of credit cards is expected to fall 10.1 percent.
AFP
