New York, NY, December 26, 2006--Consumers are expected to troop back to retail stores Tuesday, looking to return ill-fitting apparel, cash in gift cards and take advantage of post-Christmas clearance discounts.
The day kicks off the second phase of the holiday shopping season, one marked by an increase in online spending, unseasonably warm weather in some parts of the country, a debilitating snowstorm in another, and a vicious price war on home electronics.
"This will be like a whole new holiday for some retailers. Between online shopping and gift-card purchases, you'll have some consumers setting foot in stores for the first time this season," said Marshal Cohen, chief retail analyst with market researcher NPD Group.
'This will be like a whole new holiday for some retailers.' — Marshal Cohen, NPD Group
Cohen is expecting same-store-sales growth for the holiday season in a range of 3.2% to 3.5%.
Gift-card sales are expected to have more of an impact than ever this year.
Once considered an unimaginative gift idea, the percentage of the consumer budget reserved for gift cards soared to 20% in 2006 from 6.6% in 2003, according to the National Retail Federation. That spike is expected to boost after-Christmas shopping, although this represents a mixed blessing for retailers, which don't book the revenue they contain until the gift cards are redeemed.
Online sales continued to grow, with comScore Networks forecasting a 25% increase in online holiday sales, in part reflecting how many bricks-and-mortar retailers spruced up their Web sites to better drive customer traffic. But the strategy likely kept shoppers out of stores, and thereby cut down on impulse buys, which account for about 25% of holiday purchases, NPD's Cohen said.
Visa was initially expecting a 7.5% increase in holiday sales, but it lowered its target to a range of 6% to 7%.
"Things started slower, and then people procrastinated," said Visa spokesman Kenny Thomas. "And it'll be hard to make up for that."
Many retailers are offering deep discounts and special hours to lure shoppers into stores.
Macy's, a unit of Federated Department Stores is opening many of its stores at 7 a.m. Tuesday, hoping to take advantage of an after-Christmas shopping surge, and is advertising 50% to 75% discounts, with an extra 15% off for store-credit-card users, and shoppers will find another 20% off on jewelry and a further 10% off on merchandise in select departments.
For its part, Best Buy Co. marked down scores of home electronics and offered extended store hours and many locations.
Also of note, Toys "R" Us is offering "buy two, get one free" on MGA Entertainment's Bratz dolls and play sets and Thomas & Friends engines, buildings and bridges. Select video-game accessories and software are marked 50% off.
The holiday shopping season kicked off, as is traditional, on Black Friday, the day after Thanksgiving, with some stores opening before dawn, luring shoppers with sharp discounts on flat-panel televisions, notebook computers, MP3 players and digital cameras.
But after the mad rush over that weekend, sales seemed to slow, as shoppers sat on the sidelines waiting for a new round of discounts.
'You have to wonder how much better sales could have been if the weather was a little more seasonal.'— Scott Krugman, National Retail Federation
"I didn't see any hot items driving sales," NPD's Cohen said. "I didn't see any retailers doing anything unique."
Another element adding to the procrastination was the calendar. With Christmas falling on a Monday, consumers were able to shop right up through the weekend before, and retailers were hoping for an 11th-hour boost to sales.
ShopperTrak, which measures retail activity, said preliminary sales on so-called Super Saturday -- the Saturday before Christmas -- rose 61.7% to $8.72 billion.
