Shoppers' late spending spree salvages season for merchants

Thanks to last week, Gage Menswear is up 7% this month

December 31, 2003|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

Procrastinators and shoppers lured by after-Christmas bargains added a last-minute surge that likely pushed retail sales up an estimated 5 percent from last year, ending a string of rotten Christmas seasons.

Earlier this month, sales were hurt by snowstorms that kept shoppers indoors, but heavy buying just before Christmas and in the week after helped most retailers meet their goals.

Baltimore-based Gage World Class Menswear has seen a 7 percent increase in sales so far this month and said most of it came the week of Christmas.

"Going into that last week, we were nowhere near there, so that last week [carried] us over the top," said owner Bill Glazer.

ShopperTrak, a Chicago-based research firm, reported a 24.6 percent increase in total sales for the week of Christmas, putting this holiday season (Thanksgiving weekend through December) on pace to be 5 percent stronger than last year.

From Dec. 1 through this past Saturday, total sales rose 6.3 percent compared with the year-ago period, according to ShopperTrak, which tallies total sales at 30,000 retail outlets.

MasterCard Advisors estimated yesterday that sales had grown 6.45 percent through Dec. 24 of this year's holiday season compared with the corresponding period last year, with consumer electronics and Internet purchases among the most popular.

Meanwhile, the International Council of Shopping Centers-UBS same-store sales index reported that same-store sales were up 2 percent in the week that ended Saturday from the previous week, which saw only a 0.6 percent rise.

"Right now it appears that the last-minute buying binge really did go a long way to propelling the month," said Michael Niemira, ICSC chief economist and director of research.

Niemira expects overall holiday sales to increase by 4 percent to 4.5 percent over last year, the highest since 1999 when it increased 5.4 percent.

Many shoppers waited until the last minute to buy gifts, holding out for steep discounts that never materialized, some analysts said. Most retailers ordered leaner inventories to avoid a repeat of last year's dismal season when they were left with extra merchandise.

"I don't think that consumers believed that retailers would follow through with what they heard the plans were, which were for much fewer discounts than in the past," said ShopperTrak spokesman Jason Milch.

"I think consumers tried to call retailers' bluff for a little while, but it didn't work. They had to buy something eventually."

The data suggests good weather may have also brought shoppers out last week. The strongest show in sales was in the Northeast, which was hit by snowstorms earlier.

And there were some bargains to be found, bringing out many shoppers the day after Christmas, retail analysts said.

Sales that day were also helped by a boom in gift-card buying, which analysts predict will account for up to 10 percent of sales, or $20 billion. People planned to give $17.2 billion in gift cards, according to National Federation of Retail study, but sales aren't calculated until the cards are redeemed.

Niemira said the low inventory many merchants carried this year could cut down on merchandise choices and cause some consumers to hold onto their gift cards a little longer.

"I think there's a risk it could get a little softer," he said. "You have gift cards that could probably propel $15 billion in sales but we have no place to spend them. At this point, lean inventories could cut into that desire to buy."

Wal-Mart Stores Inc. sold 20 percent more gift cards than last year and expects a large number of those cards to be cashed before Jan. 2, when it closes its books for the holiday season. The Arkansas-based discounter saw a boost in sales at the end of the season, but still predicts a sales increase in the lower range of 3 percent to 5 percent.

"This year it just seemed people were shopping even later than before," said Wal-Mart spokeswoman Sharon Webber. "I don't know if it's the weather or we're just turning into some really busy people."

When retailers release individual sales numbers next week, high-end and luxury shops are expected to be some of the big winners as a recovering economy has made consumers more comfortable with spending.

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