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With hours remaining, holiday hopes flicker

This was supposed to be the holiday season that reversed the heavily promotional trends of the past three years, one that would yield sales gains not seen since the heady holiday of 1999.

As the final weekend for pre-Christmas shopping drew near, however, panicky retailers were flooding mailboxes and email boxes with promotional offers. Overall sales failed to hit their targets during the week of Dec. 8-14, according to Redbook Retail Sales Average. And retailers in several channels were expressing concern about consumer spending levels.

With nine days left to go in the season, Wal-Mart on Dec. 15 dampened spirits by announcing it expected December comps to come in at the low end of its forecast for a 3 percent to 5 percent gain. Target stores reported that sales at its stores through Dec. 13 were running below plan. Retailers as diverse as Family Dollar and Pier 1 were advising investors that their holiday sales had slumped.

Pier 1 chairman and ceo Marvin Girouard offered a strikingly candid assessment during last week's conference call. Dec. 14, he said, was "probably the biggest disappointing day I've had in all of my experience, because we really thought we'd were going to see some momentum start to gain."

In the run-up to the final shopping weekend, one question predominated across retailing: Would enough consumers turn out for what has become the heaviest shopping period of the season?

A consumer survey released late in the week by the National Retail Federation cast doubts on that scenario. The NRF found that the average consumer had wrapped up 68.5 percent of the season's shopping by Dec. 10, with 14 days remaining in the season. More ominously, women — who do the preponderance of the heavy shopping — had concluded a whopping 73 percent of their buying by Dec. 10.

"Lack of big savings offers of 50% off have reduced consumer spending in two very critical areas — consumers buying something nice for themselves and one-third of America acknowledging spending less this shopping season," said America's Research Group chairman Britt Beamer, who last week lowered his projection for the season's sales increase to a 4.2 percent gain vs. 4.8 percent.

With many consumers taking vacations starting Dec. 19, he added, two out of five Americans had completed their shopping by Dec. 14.

While there may not have been as many 50-off promotions early in the season, there were still plenty of $29 bed-in-a-bags, $18 quilts, and deep discounts on holiday-themed merchandise by the second week of the season.

Macy's New York metro area customers were bombarded with a series of promotional mailers. For home goods, the series of deals offered:

  • 10 percent off Dec. 11-15;

  • 15 percent off Dec. 14-15;

  • 30-50 percent off Dec. 16;

  • A "last big weekend" of 50 percent off Dec. 19-21;

  • 15 percent off Dec. 18-20;

  • 10 percent off Dec. 21-23.

Deals everywhere came fast and furious. On Dec. 17, bankrupt Speigel launched a "buy now, pay later campaign," which allowed consumers to defer payments until April 2004 on orders of $100 or more.

The following day, Sears dropped expiration dates from its gift cards in a bid to grab a piece of business that has been projected by the NRF to grow to $17 billion this year, or 8 percent of total holiday sales.

"While other retailers charge fees and enforce expiration dates, Sears has never attached a maintenance fee to its gift cards, and now our gift cards never expire," said Kris Crow, vp of customer relationship management.

Kohl's slashed prices on some home goods by up to 50 percent during Dec. 14-20.

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