CONSUMER FINANCE: Retailers Offer Early Holiday Bargains

CONSUMER FINANCE: Retailers Offer Early Holiday Bargains

By Jennifer Waters

From a promotion point of view, this could turn out to be the longest holiday-shopping season on the books, giving consumers a host of deals from which to choose right up until Christmas.

Though retailers’ shelves are better stocked now than they were last year, it is still not wise to wait too long.

“Every consumer is looking for those bargains and when they find them, early or late, they should not wait,” said Michael Niemira, chief economist for the International Council of Shopping Centers.

In other words, if you see something you want at a price you are willing to pay, snap it up.

“Shop early, buy early because that is when you will find the best and deepest selections,” Niemira said.

Still smarting from pushing the deep-discount panic button in 2008 when holiday sales dipped for the first time on record, retailers are again taking a cautious path to holiday selling this year. In 2009, last-minute shoppers found themselves out of luck because many stores, reining in inventory, ran out of everything from sweaters to electronics.

Retailers aren’t quite as guarded as they were last year, thanks to slight improvements in consumer sentiment and retail sales in recent months.

Industry projections on sales gains this year vary but share the same conclusion: Consumers will spend more this year. The National Retail Federation is predicting a 2.3% increase in sales over last year’s drop, ICSC raised its forecast to a 3% to 3.5% gain, and retail analysts at IBISWorld are anticipating a 3.6% rise.

“The signs are certainly positive,” said Toon Van Beeck, senior retail analyst for IBISWorld.

He is betting sales will reach $111.4 billion this year, about $11.5 billion shy of how much consumers doled out in 2007.

   Early Start

Retailers began hawking holiday promotions as far back as July and may not let up through the end of the hottest shopping period of the year.

“We’re seeing plans for promotional activity that’s very aggressive early in the season to right after the holidays,” said David Sievers, strategy and operations practice leader for Archstone Consulting, a retail consulting division of the Hackett Group

“Retailers have better control over their businesses this year and are anticipating growth,” he said. “They’re taking less risk.”

The Christmas-in-July sales started when Kmart, Sears, Toys ‘R’ Us Inc. and Target Corp. (TGT) rolled out aggressive promotions modeled after the deep discounts that traditionally have been saved for the day after Thanksgiving. That is known as Black Friday, which, according to lore, was the day when retailers would go into the black for the year as U.S. consumers descended on stores to kick off the holiday-shopping season.

In July, Target, for example, slashed 40% off the price of 500 items that ranged from clothing to toys to electronics.

Retailers bring out such promotions early for two reasons: They want consumers to have their stores or brands in mind for the important holiday-shopping season, and they want to shift consumer holiday spending from the tight November-December deluge to a more manageable July-to-December period.

That allows consumers with tighter budgets to use layaway–popular again this year at Kmart and Sears–to better budget what they spend for gifts. Better budgeting typically leads to higher sales for retailers. At the same time, people who shop early for the holidays tend to shop often, which means they spend more than they might have in a last-minute spree.

Kmart and Sears, for example, brought back the Christmas Club card in September, a savings plan that is similar to a store credit card. With the Christmas Club card, consumers can add money to their accounts on a regular basis and then redeem it for gifts later.

   Wealthy Feeling Better

This year the divide between the haves and the have-nots will be far more noticeable than in recent years as the affluent feel less financial pain and, quite frankly, less guilt when spending.

“For the higher-income households, the recession is on its way out and things are getting better, said Ben DiSanti, senior vice president at TPN Inc., a retail and shopper marketing agency. “They don’t mind spending now.”

As a result luxury retailers such as Saks Inc. (SKS), Coach Inc. (COH) and Tiffany & Co. (TIF) are bracing for a substantially better year than last as consumers shop for jewelry, leather goods and other pricey apparel. Even Target has set its sights on luring better-heeled customers this year.

Meanwhile, the have-nots continue to struggle to make ends meet, and many are hard-pressed to spend without deep discounts. Wal-Mart Stores Inc. (WMT) took notice and started its own version of the crowd-sourcing, Groupon-like promotions in which deals are given if a certain number of consumers sign on to them.

This fall, Wal-Mart launched CrowdSaver on Facebook with 18% off a plasma TV if it received 5,000 likes. The deal was a hit.

“It’s the have-nots who are saying I need an even deeper discount,” DiSanti said.

   Long Road To Bargains

Though six months seems like a long time to be thinking about buying Christmas presents, it does have its advantages for consumers. Door-buster deals are no longer just the province of Thanksgiving weekend.

This year, too, retailers are attempting to keep the enthusiasm throughout the day while thinning out the crowds at the break of the dawn on Black Friday.

Wal-Mart will open stores at midnight on Nov. 26, except where prohibited by local law, when it will offer deals on toys, apparel and home goods. The sales on electronics, televisions and computers won’t begin until 5 a.m.

J.C. Penney Co.’s (JCP) sales on women’s boots, small appliances for the kitchen and luggage will start at 4 a.m. Friday until 1 p.m.

Looking to outdo its competitors, Sears, for the first time ever, will open its doors at 7 a.m. on Thanksgiving Day. Toys ‘R’ Us will open at 10 p.m. that day, too. Kohl’s Corp. (KSS) will offer early-bird specials online on Thanksgiving.

(Jennifer Waters is a writer for MarketWatch. She can be reached at 415-439-6400 begin_of_the_skype_highlighting              415-439-6400      end_of_the_skype_highlighting or via email at

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