`Can't wait' customers

Retailers pin hopes on Christmas cash, gift cards

December 27, 2007|By Andrea K. Walker and Tricia Bishop | Andrea K. Walker and Tricia Bishop,Sun reporters

Tami Scovitch parked herself on a bench outside of teen clothing store Hollister after being dragged around The Mall in Columbia twice yesterday by her teenage daughter and a friend, who were eager to spend their Christmas cash and gift cards.

"They've been wearing me out all morning," said the 45-year-old deli manager from Elkridge, surrounded by bags of clothes the girls had already bought or exchanged. "They couldn't wait to get to the mall to spend."

Retailers are hoping that families like the Scovitches will help give a boost to the holiday shopping season, which many analysts said is suffering from cautious spending by consumers worried about the economy.

Shoppers crowded stores yesterday looking for discounts, redeeming gift cards and returning or exchanging unwanted Christmas gifts, giving merchants one last chance to turn around a lackluster season.

The International Council of Shopping Centers, or ICSC, said yesterday that this year's holiday sales growth could come in slightly lower than the 2.5 percent it initially predicted. And discounter Target Corp. said this week that its December sales might decrease compared with 2006. Even Internet sales, which have been rising exponentially, slowed their pace.

The post-holiday period has become a critical time for retailers, which earn a significant amount of their sales during that time. Gift cards, which can't be counted as revenue until they're redeemed, now drive the shopping season well into January.

About 80 million people - roughly 40 percent of the country's shoppers - are expected to hit the malls this week to take advantage of after-Christmas discounts, shopping mostly for themselves rather than their friends and families.

Heather Morris, 16, was one of them. She and two classmates got up early to make the trip from Eldersburg to The Mall in Columbia to buy hoodies, jeans and sweaters. Morris received gift cards to such stores as Abercrombie & Fitch and Hollister, and she wanted to cash them in yesterday.

"I was ready to spend them right away," she said.

Michael P. Niemira, ICSC chief economist and director of research, said that "post-Christmas spending and gift card redemption" is the one thing left that could help drive up sales.

Gift card sales have been steadily rising during the past five years - the biggest jump was between 2005 and 2006, when consumers spent 34 percent more. The pace of growth is expected to slow this year but still set a record. The National Retail Federation predicted that gift card sales would rise about 6 percent this year to $26.3 billion from $24.8 billion.

Hoping to clear out winter inventory and entice shoppers to redeem their gift cards earlier rather than later, retailers promoted heavy discounts yesterday.

At The Mall in Columbia, just about every store posted signs announcing their deals. "Clear the Racks, 50 Percent Off," read a sign outside Express. Another was seen at Aldo shoes, where "Up to 70 percent off," was offered. A sign at Banana Republic read "40 percent off." And Lord & Taylor touted an "EXTRA 50% OFF ALREADY-REDUCED" merchandise in newspaper advertisements.

"Things are up to 75 percent off, and you're going to see additional discounts if you use a store card," said Marshal Cohen, a chief analyst with market research firm NPD Group. "They're almost paying you to come shop. It's come to that point."

Larry Holloman, a 47-year-old technician from Severn, said he and his wife have made it a tradition to buy each other gifts the day after Christmas when the sales are better. They make a day out of it, ending with dinner at their favorite restaurant.

"We both get what we want, and we save money," said Holloman, weighed down by four Macy's bags as he waited for his wife outside the Yankee candle store.

Brigette Richardson, a 25-year-old teacher from Randallstown, said she was eager to spend Visa gift cards she got for Christmas while the deals were still good.

"Now is when you get a lot of the big savings," she said. "Plus a lot of people went back to work, so it's not as crowded. This weekend it will be crazy."

Sales the weekend before Christmas rose 19 percent compared with the corresponding period last year, according to ShopperTrak, a Chicago firm that tracks holiday spending. But the boost wasn't expected to salvage the rest of the season, which the National Retail Federation projected will have the slowest sales growth in five years, about 4 percent. The 10-year average sales growth is about 4.8 percent.

Even online sales, which have enjoyed steep annual increases as people become more comfortable with the Internet, were up by less than usual this holiday season, according to ComScore Inc. Web sales from November through Dec. 21 rose 19 percent to $26.3 billion. Last year, sales growth for a comparable period was 26 percent.

"I don't think it's been the same meteoric rise online as it had been for the past several years, but still, it's up," said Ed Farrell, associate director of the Consumer Reports National Research center.

Farrell attributed the slowed revenue growth to rising fuel prices and the thousands caught in the mortgage crunch. "People are a little bit uneasy about spending a lot of money," he said.

Even so, some stores greeted large crowds yesterday.

The GameStop video game store at The Mall in Columbia was packed with kids who shopped using cash and gift cards they received for Christmas. Darren Charles, 10, bought two Naruto video games for his PlayStation 2 and Nintendo DS game consoles.

"As soon as he got his gift cards, he was talking about spending them," said his mother, Anne Charles, who was visiting the area from North Carolina.

Said Scovitch of her daughter: "She was determined to spend it as fast as she could."

andrea.walker@baltsun.com

tricia.bishop@baltsun.com

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