Retailers find holiday gains disappointing Modest increase of 2% expected for season, despite buying surges

Some consumers held back

Many took advantage of early promotions, post-Christmas deals

Christmas sales

January 01, 1998|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Retailers are wrapping up a ho-hum holiday season that has left many merchants disappointed by moderate sales increases -- despite a week-before-Christmas surge in buying.

Rather than giving retailers the best holiday results of the decade, many consumers held back, analysts said. Shoppers took advantage of early promotions and after-Christmas sales, bought trips and entertainment in place of merchandise, and spent about the same as last year.

Many retailers had expected that a climate of low unemployment, low inflation and a robust stock market would promise more.

But "for the third year in a row, Christmas sales are disappointing merchants," said Kenneth Gassman, a retail analyst with Richmond, Va.-based Davenport & Co. "We have to ask some fundamental questions about the importance of the Christmas selling season."

Historically, the Christmas season has accounted for up to 40 percent of retailers' annual sales.

But several recent trends are coming into play, Gassman said. As ever-more competitive retailers offer deeper discounts on a wider selection of merchandise as early as October, consumers are buying earlier -- or waiting for after-Christmas bargains.

And aging baby boomers are spending Christmas money on ski trips or Caribbean vacations instead of at the malls, while others are saving for children's college and their own retirement, Gassman said.

Industry surveys indicate that overall increases will be slightly more than 2 percent, rather than the 3.5 percent to 5 percent range some predicted.

Retailers will report official December sales figures next week, with mass discounters and upscale specialty retailers expected to fare best. Those in the middle, such as department stores, are expected to fall below their targets.

"Nationwide, we had a fairly good holiday season to this point," said Jan Drummond, a spokeswoman for Sears, Roebuck and Co. "We still have several days to go. Post-Christmas shopping is becoming a very important part of the holiday season."

She said consumers have shifted more of their buying to the latter part of the season.

"Going into the last week before Christmas, Sears was below our internal plans, but the Tuesday and Wednesday prior to Christmas and the sales following the holidays have been strong," she said, adding that the region that includes Sears stores in the Baltimore metropolitan area has performed slightly below the national level.

At Target in Bel Air, "we had a lot of last-minute business," especially the few days before Christmas, said Jim Cordwell, a manager. "That week was very busy."

The discounter lured customers with promotions such as buy-one-get-another-item-free coupons.

Shoppers snapped up music, movies, books and electronics -- everything from televisions to compact disc players to video games -- and toys such as this year's popular Sing & Snore Ernie, Cordwell said, which should lead to sales increases over 1996.

"They use us as one-stop shopping," Cordwell said. "They can get everything here minus groceries."

A last-minute buying surge helped boost sales in the nation's regional malls by 2.3 percent for Nov. 28 through Dec. 24, the International Council of Shopping Centers reported this week -- with jewelry the strongest category.

Strong sales on Dec. 22 and Dec. 23 helped lift the season-to-date total from 2 percent, where it had been the previous week.

"By no means are [mall retailers] looking at it as a bad season," said Malachy Kavanagh, ICSC spokesman.

And TeleCheck Services, the Houston-based check acceptance company, reported that spending between Nov. 28 and Dec. 29, compared with the same period a year ago, had risen 2.2 percent.

In the Baltimore region, sales rose 1.3 percent for that period.

The biggest day of the season -- and most likely of the year -- turned out to be the Saturday before Christmas, TeleCheck said.

"Retailers did very heavy promoting at the end, and the depth of the sales was as deep as I've ever seen before Christmas," said William Ford, senior economic adviser for TeleCheck.

"This may be the first time the actual price paid for Christmas presents was the same as a year ago due to heavy discounting."

One local merchant managed to buck national trends.

At Albert S. Smyth Co., a Timonium jeweler and gift shop, holiday sales jumped 22 percent over last year, as the store expanded its showroom and instituted a policy of intensive customer service. Popular gifts included diamond earrings and estate jewelry, said Tom Smyth, vice president.

"We haven't seen growth like that since the late '80s," Smyth said.

"Consumers were very upbeat and optimistic. They were willing to spend a little bit more than they [originally] thought they might."

Pub Date: 1/01/98

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