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Is It Too Late For Retailers to Salvage Christmas?

December 10, 2013

Here is what we know about the holiday selling season to date.

  1. The Thanksgiving Weekend got off to a slow start even when factoring in online sales. The National Retail Federation said sales were down roughly three percent for the time period versus last year.
  2. Cyber Monday sales were strong, reportedly up between 17.5 and 19 percent, depending on the source.
  3. Retailers are still advertising and running price promotions to try and get people to spend in stores and online.

The last point is critical as consumers get nearer to completing their holiday purchases. According to the Christmas & Holiday Shopping Forecast released by America's Research Group and Inmar, nearly 31 percent of shoppers claim to have 90 percent or more of their shopping already done. That percentage is higher than at any time in the past decade.

"Those who are waiting for the last minute deals say they're holding out for 70 percent or 60 percent-off sales ... and 50 percent-off just won't cut it!" said Britt Beemer, chairman and CEO of America's Research Group, in a statement.

So what are consumers buying this year?

According to America's Research and Inmar, apparel and consumer electronics sales are strong. The percentage of people buying clothing and accessories grew from 38.8 percent last year to 47 percent so far this holiday. Sales of computers went from eight percent to 10.3 percent and televisions from 7.9 percent to 10.5 percent.

Discussion Questions:

Do you expect retailers to discount more or less for the last two weeks leading up to Christmas than they have in past years? What will this mean for retailers heading into the New Year?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Will retailers discount more or less for the last two weeks leading up to Christmas than they have in past years?


It's hard to imagine retailers being more promotional this year than in past years, but it does seem that the "layered" discounting (to charge customers, to "friends and family," and so forth) is deeper this year. Some of these events were obviously preplanned, others look like a late reaction to soft Black Weekend sales. (And stores' e-commerce sites make it much easier to trigger this kind of extra promotion quickly.)

The statistics on apparel selling are interesting, because they would represent a meaningful uptick in discretionary spending. There is no doubt that cold weather is driving better-than-expected sales of coats, sweaters, gloves and boots...but with all the extra discounting ahead of "clearance season," will stores be asking where the gross margin went?

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Dick Seesel, Principal, Retailing In Focus LLC

Retailers will continue to discount for not only the next two weeks but also into January. Not all the stock will move out in two weeks and taking into account gift cards, sales will continue into January.

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Frank Riso, Principal, Frank Riso Associates, LLC

Definitely more. There appears to be too much inventory in the stores. There's no choice but to mark it down and get it out. I expect to see wild store traffic between Christmas and mid-January as well, as people use up their gift cards...don't forget, those don't get counted as sales until they are redeemed.

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Paula Rosenblum, Managing Partner, RSR Research

This year has been an interesting anomaly, with Thanksgiving shopping cutting into Black Friday sales. Retailers will undoubtedly ramp up the discounts as we get closer to Christmas, but that habit cuts into earnings.

The really interesting trend to watch is the move to online shopping. My 91-year-old father is an Amazon customer now. Mall owners, beware.

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Cathy Hotka, Principal, Cathy Hotka & Associates

We all have to be aware of what the holiday sales numbers represent so far. Overall product tonnage movement is UP. Price deflation has kept products more affordable, yet the revenue has not met that of last year, even though more overall product has sold. Product movement has also gone through more channels this year, and I am not at all convinced that all revenues have been accurately tabulated yet.

Therefore, let's not all jump off a ledge just yet. The U.S. economy is strong... even with so many citizens still hurting financially. Malls are packed. Major purchases (cars, homes) are near record levels, and the NYSE is stronger than ever. Things are okay for most. Not all, but most. More than 50% of the population can afford to buy holiday gifts this year without cutting back on too much else. This is not the case around the world, however in the U.S., that is true.

Merchants will discount further, just like every other year. The product has to move out quickly, of course. I also believe that 2014 will be a strong year for retail sales, so merchants should be able to clean up on most leftover product.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

Based on the inventory position that many retailers are in, in my estimate, I think we will see more discounting. The WSJ touched on this a week ago. I am seeing it personally in the stores I visit. I was very surprised on the amount of stock still available at many larger retailers locally, and the strong assortments. My read on the holidays is that we will see a last-minute heavy shopping surge over the next 10 days.

Tom...retail visionary and aggressive shopper....

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Tom Redd, Vice President, Strategic Communications, SAP Global Retail Business Unit

Retailers will find ways to make this a successful holiday season. Reports of higher store inventories and port traffic tell me to expect deeper discounts and a desire to get good setup for a strong 2014. Marathon sales (e.g., Kohl's) and improved promotional targeting will help. The economy, while not roaring higher, is steady and unemployment is heading in the right direction.

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Mohamed Amer, Vice President, Global Integrated Retail Unit, SAP

Christmas shopping is not going to break any records this year. Yes the unemployment rate has dropped, but the majority of new jobs being created are part time. Couple this with the healthcare train wreck and consumers will be spending less. Retailers will be playing it close to the vest. Each day that they fall behind sales forecasts, the greater the discounts. Expect modest sales increases, but lower margin to reduce inventory.

Yes the discounts will get greater.

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W. Frank Dell II, CMC, President, Dellmart & Company

There appeared to be a huge surge in promotions and sales for Black Thursday/Black Friday, and in the coming days, somewhat of a pullback in traditional advertising. It seems retailers were counting on the lead up to the Thanksgiving kick-off to propel shoppers into a continued spending mode.

Consumers are still sitting on the sidelines a bit, anticipating more significant discounting leading up to Christmas Eve, which we will see, given the high inventory levels across most retailers.

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Jeff Hall, President, Second To None

Consumers are now aware of the waiting game for super discounted everything, and wouldn't have it any other way. E-commerce has taken a bigger bite out of traditional retailers every year, and the Amazing Race for survival continues, as revenues continue to get squeezed.

My father told me at a very young age that "any dummy can give stuff away, but it takes a great merchandiser to turn a profit." This still holds true today, and the pressure is on to bring in good numbers for shareholders, who may be disappointed with their EPS.

So discount away my fellow retailers, and may you still have some cash left over to start the new year, as expenses will continue to rise.

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Tony Orlando, Owner, Tony O's Supermarket & Catering

Consumers are expecting more cuts (nothing less than 60%) and retailers are giving new meaning to the word "overstocked." The forecasters thought that lower unemployment meant that consumers would revert back to spending heavily during the holidays, but those days are over (at least for the next 2-3 years while the state of US healthcare is still up in the air). It's almost like a game for consumers to see who will hold out the longest for the lowest price, and right now, the consumers are winning.

Expect to see more traditional retailers moving toward a richer, omnichannel experience as they try to move more merchandise from the clearance racks and shelves at the back of the department to in-store pickup and home delivery.

PJ Walker, Director, Digital Experience & Analytics, TCS

I think we'll see the corollary to "Notcom's Law of Xmas Shopping Dynamics": hand wringing about a(n allegedly) slow start will eventually turn into " Things ended up pretty good after all!" (The actual law, of course being that "great" starts end up lousy finishes.)

I am curious: with sales of clothing, accessories, computers and TVs - seemingly the whole retail world - taking up a larger fraction than last year, what exactly is left to take the smaller share?


Big messages are significant increases in online shopping, even among previously hard to reach segments such as the elderly, and the need therefore for retailers to effectively manage the customer experience throughout their online and offline touchpoints. Those retailers that do not give their customers logical reasons to enjoy both off and online experiences will continue to struggle in the the emergent consumer economy.

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Mike Osorio, Senior VP Organizational Change Management, DFS Group

They have to. There is too much stock on the shelves. Customers have bought deals and loss leaders and will only buy if it's worth it!

Kate Blake, Social Media Manager, Take Five with Kate Blake

I agree with Paula Rosenblum that retailers with excess inventory will discount more in the upcoming weeks as well as into January to move inventory.

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Alexander Rink, CEO, 360pi

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