Holiday shopping season a disappointment so far

To keep people coming into their stores, retailers have been pushing discounts. But that cuts into profit margins, and shoppers become conditioned to always having discounts.
Julio Cortez/Associated Press/File 2013
To keep people coming into their stores, retailers have been pushing discounts. But that cuts into profit margins, and shoppers become conditioned to always having discounts.

NEW YORK — Sparse crowds at malls and ‘‘50 percent off’’ signs at The Gap and other stores offer clues as to how this holiday season is shaping up: It’s the most discount-driven one since the nation was in a deep recession. It’s also the most disappointing for stores.

Sales were up 2 percent to $176.7 billion from Nov. 1 through Sunday, according to data from ShopperTrak. That’s a slower pace than expected. ShopperTrak’s predicts sales will rise 2.4 percent to $265 billion for the two-month holiday stretch, typically the busiest shopping period of the year.

Discounts this season are up 13 percent from last year — the highest level since 2008, according to BMO Capital Markets, which tracks 20 clothing stores.


‘‘The holiday season has been marginal to just OK,’’ said Joel Bines, managing director at AlixPartners. ‘‘Retailers are doing anything they can to get rid of merchandise.’’

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The data underscore how aggressive discounting has been both a blessing and a curse for retailers. Since the recession, the best way to get Americans into stores has been to flash discount signs.

But the discounting has had unintended consequences. Shoppers become immune to the deals, so retailers must offer bigger discounts to keep them coming into stores. That eats away at profit margins.

Analysts say retailers will have to continue discounting to attract shoppers, many still dealing with stagnant wages and rising costs.

Stores are rolling out more discounts in the final days of this holiday season. The number of promotional e-mails that seven major retailers, including Walmart and Target, sent for the 13-day period that ended Sunday was up nearly 70 percent from the same period last year, according to Market Track, which tracks discounts.


Toys ‘‘R’’ Us is offering discounts it didn’t initially plan for Saturday, which is typically the season’s biggest sales day. Kathleen Waugh, a spokeswoman who called the season ‘‘hyper competitive,’’ said the retailer is cutting prices on popular toys. For instance, Hasbro’s Furby Boomis being reduced to $39.99, down from $59.99.

Retailers hope the sales will lure last-minute shoppers. But the sales so far have not attracted as many shoppers as retailers had hoped. ShopperTrak, which tracks data from 40,000 stores, said the number of shoppers from Nov. 1 through Sunday fell 16.5 percent from a year earlier.

Still, the National Retail Federation is standing by its forecast that sales in stores and online combined will be up 3.9 percent to $602.1 billion. That growth would be higher than last year, when sales rose 3.5 percent to $579.5 billion. The last time the holiday season was really strong was in 2004, when sales rose 6.8 percent.

Much of any growth this year could come from online shopping. Even though it accounts for only about 11 percent of spending in the three months that include the holiday shopping season, it’s been a bright spot. Yet online spending, too, is behind predictions. Online spending from home and work desktop computers in the United States from Nov. 1 through Sunday was up 9 percent from a year before 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.