There has been an ongoing battle between retailers and holiday shoppers. Shoppers are waiting for deals while retailers are hoping that tight inventories provide the discipline to prevent deep discounting. (See this post and this one.) Now today’s Wall Street Journal is reporting that this weekend could be the final showdown (Stores’ Dilemma: To Deploy Discounts Now or Hold the Line, Dec 11). Let’s start with some data. Here is what consumers are looking for:
So many are holding out for deep price cuts but to a large extent stores have yet to give in. But that may be about to change:
Retailers are reluctant to hit the panic button. So far, they have avoided drastic price cuts by hewing to carefully planned promotions and limiting inventories. But if shoppers aren’t out in force this weekend, many mall-based clothing retailers have arranged contingency plans for additional sales and markdowns.
How will this play out? The article reports that after a reasonably strong Black Friday (given the economic environment) store traffic has dropped sharply. That suggest that either consumers have been too busy to get out to the mall or that they are a bunch of bottom feeders waiting for big price breaks. While the arrival of real winter weather in a large swathe of the country may have contributed to a slowing of sales, the latter seems more likely. That is, if we can all hold back until Monday, we may get our cheap Christmas after all.
UPDATE: So it appears that retailers have blinked, at least in Southern California. The LA Times reports that “Desperate times call for deep discounts at the mall” (Dec 14). To quote the article:
There was plenty of elbow room at Sherman Oaks Fashion Square, despite signs offering steep discounts. …
It’s getting to be do-or-die for a lot of retailers as the seasonal shopping days dwindle. If Christmas doesn’t meet expectations, thousands of stores across the country are going to be forced to close in the first half of next year, according to real estate experts. Worried merchants are going all out to attract customers.
With sales generally moving along at about the same tepid pace as last year, many stores have taken aggressive steps in advertising, promotion and discounts, said retail industry analyst Jackie Fernandez of Deloitte & Touche. “They’ve had to do quite a bit to get customers in,” she said. “A lot of retailers put most of the store on sale.”
The article is also notable for this information about one of the mall customers it quotes:
Discounts are everywhere, agreed shopper Stuart Wall on Sunday morning at Sherman Oaks Fashion Square. “Prices are crazy,” he said. Wall, an adult movie producer, was sitting in one of the mall’s vibrating massage chairs waiting for LensCrafters to open.