Stores re­sisted last year’s big deals

Shop­ping

Austin American-Statesman - - BUSINESS - Con­tin­ued from B

spent a year ago. She said she’ll be look­ing for deep dis­counts when she heads to stores this week­end.

“I just want to be cau­tious,” said Ro­manello, 47, who has two chil­dren, ages 12 and 15. “If it’s a great deal, I will con­sider.”

The price slash­ing might be good news for shop­pers, but it hurts stores. Their prof­its likely will suf­fer in their last­ditch ef­fort to boost sales dur­ing the two-month hol­i­day shop­ping pe­riod, a time when they can make up to 40 per­cent of their an­nual rev­enue.

To be sure, stores have been of­fer­ing dis­counts through­out the sea­son, but they re­sisted the block­buster deals that ate away at prof­its last year. In fact, pro­mo­tions and dis­count­ing were down 5 per­cent through Dec. 10 com­pared with last year, ac­cord­ing to BMO Cap­i­tal Mar­kets, which tracks pro­mo­tions at about twothirds of mall stores. But sales have been slow, and as of Mon­day, the level of dis­count­ing is now even with a year ago.

Now, stores will have to rely even more on the fi­nal days be­fore Christ­mas to make up the sales short­fall.

Shop­perTrak, which counts foot traf­fic and its own pro­pri­etary sales num­bers from 40,000 re­tail out­lets across the coun­try, said Wed­nes­day that the num­ber of shop­pers in stores for the week that ended on Satur­day fell 4.4 per­cent from the year-ago pe­riod, while sales de­clined 4.3 per­cent.

As a re­sult, the com­pany said it would slash its sales forecast to a 2.5 per­cent in­crease to $257.7 bil­lion, down from the 3.3 per­cent growth it had ini­tially pre­dicted.

And on­line sales, which have been seen as a bea­con dur­ing the sea­son, have been be­low ex­pec­ta­tions, too. On­line sales are up 13 per­cent to $35 bil­lion from Nov. 1 through Dec. 16, ac­cord­ing to comS­core, an on­line re­search. That pace is be­low the forecast of 17 per­cent for the sea­son.

“It feels like the steam is out of the hol­i­day since Black Fri­day,” said Bill Martin, Shop­perTrak’s co­founder.

In­deed, many shop­pers have been weighed down by con­cerns about their fi­nan­cial fu­ture. Some worry about the weak U.S. job mar­ket, while oth­ers fear the pos­si­bil­ity that a stale­mate be­tween Congress and the White House over the U.S. bud­get could trig­ger tax in­creases and spend­ing cuts known as the “fis­cal cliff” next year. That would mean less money in shop­pers’ pock­ets.

Wal-Mart CEO Mike Duke said dur­ing a speech in New York City last week that a re­cent poll of shop­pers of the world’s largest re­tailer found an over­whelm­ing ma­jor­ity are aware of the threat of higher taxes, which is lead­ing some to cut back on hol­i­day buy­ing.

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