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Stores try to create shopping surge in final days

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December 16, 2010
— You won't find uncommonly deep discounts, but you won't have to worry about finding something to buy, either. For the first time in three years, the Christmas season is looking brighter for stores and shoppers alike.

With plenty of dollars remaining to be spent, stores are trying to attract late shoppers with measured discounts and other gimmicks, including pulling all-nighters and pushing more last-minute gifts.


Consumers are more primed to spend than they have been in several years. Projections for holiday spending are starting to approach pre-recession levels. The National Retail Federation and research firm ShopperTrak both raised their holiday forecasts this week.


Shoppers spent more than expected in November, helped by early discounts. And even though they've backed off more in early December than stores had hoped, analysts and retailers aren't worried.


That's because a burst of spending happens in the 10 days before Christmas, a period that accounted for 34 percent of holiday sales last year, up from 31 percent in 2006, according to ShopperTrak.


Store inventories are not as depleted as last year, when merchants scared about having too many leftovers began the season with skimpy offerings. That made it hard for shoppers to buy even a strand of lights in early December.


A few hot sellers are hard to find, according to Karen MacDonald, a spokeswoman at Taubman Centers. And those seeking some of the hot toys like Mattel Inc.'s Monster High dolls will have a hard time, though Toys R Us says it will keep getting daily shipments of the season's hot toys.


"We are in very good stock position," said Kathleen Waugh, a Toys R Us spokeswoman. "We picked the right toys. We'll be ready around the clock."


The National Retail Federation, the nation's largest retail trade group, raised its holiday forecast to 3.3 percent from its original projection that sales would climb 2.3 percent. That would put holiday sales at $451.5 billion, close to the holiday 2007 levels of $452.8 billion and well above 2006's $444.7 billion. The figure excludes auto, restaurant and gasoline sales.


The increasing optimism comes as government figures released Tuesday showed that retail sales for November jumped 0.8 percent over October.


A lot depends on this weekend, the last before Christmas. If stores don't make their sales goals, shoppers may see steeper discounts in the final days. Stores are betting that won't happen.


"You're definitely not going to see the fire sales. The discounts will be measured," said Sherif Mityas, partner in the retail practice at A.T. Kearney. He said that clothing discounts in general won't be much more than 40 percent this weekend. "Retailers have learned a lot during the recession."


Among those lessons: Shoppers often need a discount or a gimmick to buy.


Toys R Us plans to keep its stores open for 88 straight hours, from 6 a.m. Tuesday until 10 p.m. Christmas Eve. This is the first time the entire chain will be open around the clock in the final countdown to the holiday.


Macy's Inc. has increased the number of stores pulling all-nighters starting next Tuesday to 14 from last year's 12; a few others will stay open until 2 a.m. next week.


So far, analysts say, Target's 5 percent discount for paying with the discounter's branded debit and credit card is stealing sales away from other rivals. Chandra Blatt, 38, of Hillsdale, N.J., who was at the Target store in Paramus, N.J., on Friday, said she'll do about half of her Christmas shopping this year because of the incentive.


"Every little bit helps," said Blatt, who was picking up toys, a bathrobe and other gifts. She said she saved $24.01 because of the discount. But she won't be spending more overall. She and her husband both got jobs earlier this year, after being unemployed for a year, so they are "still playing catch up," she said.


Department stores such as Macy's appear to be attracting holiday shoppers with a focus on exclusives and affordable items. Macy's spokesman Jim Sluzewski said the chain is sticking to planned promotions.


There are some laggards as well.


Best Buy Co., the nation's largest electronics chain, has lost sales of lower-priced TVs and laptops to competitors Wal-Mart and Amazon.com. Best Buy said that it has stepped up discounts for 32-inch TVs in December and increased its offerings of laptops under $400.


Consumers are not entirely back. They are still "seeking value" but it's not all about price, Morris said.


"We're trying to buy things that are more meaningful instead of a bunch of little things," said Sarah Porter, 25, who was at Pioneer Place Mall in Portland, Ore., on Friday.


ShopperTrak, which tracks total retail sales at more than 70,000 outlets, now expects holiday sales to rise 4 percent over last year, up from a previous projection of 3.2 percent made in mid-November. The original estimate was for a 2.9 percent increase. A 4 percent increase is considered quite healthy.


Shoppers, however, have had a bit of a hangover so far in December. Sales for the week ending Saturday fell 0.4 percent compared with last year, according to ShopperTrak. Another culprit was a winter storm that dumped mounds of snow across the upper Midwest on Sunday.


Jack Kleinhenz, chief economist at the NRF, said that while early promotions in November and bad weather last weekend may have taken a bite out of December, he feels encouraged by a "positive cluster of economic data." He pointed to an improving stock market, income growth and the extension of government unemployment benefits.


"People do have the capacity to spend," he said. "The way I am looking at it, it's going to be a good season."



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