Retailers hope to lure shoppers with deep discounts

The concern is whether Dec. 26 sales have lost their impact when retailers did so much discounting in the final days before Christmas.
December 26, 2013 8:48:51 PM PST
Thursday was a crucial day for retailers to see whether consumers are willing to spend to make up for what is being called a lackluster holiday shopping season. But traditional clearance sales may have lost their punch.

Not long ago, day after Christmas clearance sales meant 50 percent off. But some retailers in the past week already were offering that much off and more. The deeper the discount, the more it cuts into any hope of a profit.

Stores opened early Thursday morning, but the day kicked off with fewer shoppers than expected.

The concern is whether Dec. 26 clearance sales have lost their impact when retailers did so much discounting in the final days before Christmas. When some were offering 50-60 percent off earlier in the week, how much deeper can they go?

Retailers found their in-store sales cannibalized by a big shift to online shopping. On top of that, Golden Gate University consumer psychologist Kit Yarrow says the improving economy caused a shift in what consumers wanted.

"A, people have been shopping online; B, really big ticket items, such as furniture and automobiles, are up, so some of that money that might have been spent on apparel, for example, is siphoned off to those big-ticket purchases that people have had pent-up demand for," Yarrow said.

Retailers are now hoping that consumers will start using an estimated $30 billion in gift cards that were purchased this season. The strategy is that almost two-thirds of shoppers spend more than the value on those gift cards.

There is concern now that lackluster holiday sales may claim a casualty -- a major retailer that may not be around next Christmas. That would reduce competition, but also give consumers one fewer choice.


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