Holiday shopping season slow so far

AP Retail WriterDecember 19, 2013 

Holiday Sales

In this Thursday, Nov. 28, 2013, photo, A "Triple Doorbuster" sale sign is placed at the toys section in Kmart during Grey Thursday shopping, Thursday, Nov. 28, 2013, in New York. Sales are up 2 percent through Sunday, Dec. 15, 2013, according to data obtained by The Associated Press from store data tracker ShopperTrak, on Wednesday, Dec. 18, 2013, which declined to give dollar figures. The modest growth so far comes as the amount of discounting stores are doing is up 13 percent from last year, the highest level its been since 2008 when stores were holding huge sales events to draw in recession-weary shoppers, according to research firm BMO Capital Markets. (AP Photo/Julio Cortez)

JULIO CORTEZ — AP

NEW YORK -- Sparse crowds at malls and "50 percent off" signs at The Gap, AnnTaylor and other stores give a clue as to how the holiday season is going.

This is shaping up to be the most discount-driven holiday season since the country was in a deep recession. It's also one of the most disappointing for stores.

Sales are up 2 percent to $176.7 billion from the start of the season on Nov. 1 through Sunday, according to data obtained by The Associated Press from store data tracker ShopperTrak.

That's a slower pace than expected given that there are just days left in the season: ShopperTrak is forecasting that sales will rise 2.4 percent to $265 billion for the two-month stretch that's typically the busiest shopping period of the year.

The modest growth comes as the amount of discounts that stores are offering this season is up 13 percent from last year -- the highest level since 2008 when the country was in a recession, according to financial services firm BMO Capital Markets.

"The holiday season has been marginal to just OK," said Joel Bines, managing director and co-head of the retail practice at AlixPartners. "Retailers are doing anything they can to get rid of merchandise."

The data underscores how aggressive discounting has been both a blessing and a curse for retailers. Since

the recession, the only way to get Americans into stores has been to flash huge yellow discount signs in front of their faces.

But all that discounting has had some unintended consequences. Retailers have learned as shoppers become immune to the deals, they have to continue to offer bigger discounts to get them in to stores.

That erodes sales since shoppers are spending less. It also eats away at stores' profit margins. Still, analysts say retailers have created a cycle of constant discounting that they'll have to continue in order to attract U.S. shoppers, many of who are still dealing with stagnant wages and rising costs for things like health care.

Still, stores are rolling out more discounts to try to attract last-minute shoppers. The number of promotional emails that seven major retailers including Wal-Mart and Target sent for the 13-day period that ended Sunday was up nearly 70 percent from the same time period last year, according to Market Track, which tracks discounts.

And Toys "R" Us is throwing in extra discounts that it didn't initially plan for Saturday, which is typically the season's biggest sales day. Kathleen Waugh, a Toys "R" Us spokeswoman who called the season "hyper competitive," says the retailer is cutting prices on popular toys.

Retailers are hoping to lure shoppers like Larry Berge. By last weekend, he'd only completed 20 percent of his holiday shopping. He was at the taking advantage of a 30 percent coupon on pajamas for his wife at a Victoria's Secret in Atlanta on Sunday. "It's not like shopping as much as it is a targeted surgical strike," said Berge, 44, a physician.

But the sales so far have not attracted as many shoppers as retailers had hoped. ShopperTrak, a Chicago-based firm that tracks data at 40,000 stores across the country, said the number of shoppers from Nov. 1 through Sunday dropped 16.5 percent compared with the same period a year ago.

Still, ShopperTrak is sticking to its growth forecast for the season. Bill Martin, ShopperTrak's co-founder, reasons that six of the holiday season's top 10 spending days still are left.

And he estimates that the week before Christmas accounts for 10 percent to 15 percent of overall holiday business.

"The good news is that there are still some big days left," Martin said.

The National Retail Federation, the nation's largest retail group, also is standing by its forecast that sales in stores and online combined will be up 3.9 percent to $602.1 billion. The average holiday shopper had completed only 49.9 percent of their buying as of Dec. 9, according to a survey of about 6,300 by trade group, slightly less than the 56.4 percent that had completed their shopping a year ago by that time.

But much of that increase could come from online shopping. Even though it only accounts for about 11 percent of spending in the four months that include the holiday shopping season, it's been a bright spot.

Still, total online spending is even falling below forecasts so far. Online spending from home and work desktop computers in the U.S. from Nov. 1 through Sunday was up 9 percent from the same period last year to $37.8 billion, according to comScore. But the Internet research firm still expects online sales to meet or slightly surpass its 14 percent growth forecast.

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