Sale-seeking shoppers play chicken with retailers

December 15, 2012 

Let the retail roulette begin. As the shopping days dwindle before Christmas, retailers are looking at their sales trends, eyeing what's left on the shelves, and placing bets on last-minute buyers. Meantime, shoppers are counting up their gifts, looking at what's left in their checking accounts and deciding if they can afford anything more.

With just over a week before the holiday, stores already have begun discounting merchandise in the effort to convert shoppers into buyers. Every year, this game plays out between retailers and their customers. Will stores cut prices fast enough to entice consumers but preserve some profit margins, or will shoppers end their procrastination and pony up the money only after deep discounts? Already, J.C. Penney has backtracked on its pledge to cut back on special promotions and coupons. Kohl's exclusive sales items have fizzled with its shoppers.

Retailers are a nervous bunch. It's understandable considering the intense competition from Internet sales, shrinking profit margins and ever-changing consumer tastes. But many stores also have conditioned their shoppers to expect and wait for deals. Certainly both your snail mail and email boxes have been jammed with coupons, daily deals and 24 hour sales offers.

When the holiday clock winds down for traditional retailers, the only questions are how big will be the discounts and how much will profits be pinched.

Tom Hudson, anchor and managing editor of "Nightly Business Report," can be followed on Twitter HudsonNBR

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