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Business & Economy

’Tis the season to buy less

23 December, 2013

 * U.S. shoppers seek bargains, Britons affected by weather, as Cypriots spend less *

’Tis the season to be merry, but not so for retailers around the world who have seen a drop in sales on the weekend before Christmas, affected by a hunt for last-minute bargains in the U.S., austerity in Cyprus and the southern European economies and harsh weather conditions in the U.K.
Consumers in the U.S. shopped less despite deeper discounts. Shoppers also showed signs they will do more of their spending after December 25 than they did in the same period last year in the hopes of snagging even more deals.
Analytics firm RetailNext estimated that U.S. retail sales fell by a mid-single-digit percentage at brick-and-mortar stores on Friday and Saturday, two of the four most important shopping days of the season, compared with the same days last year.
That does not include online sales, which have been strong.
The number of visits to stores fell 7% on Friday and Saturday, RetailNext said.
"Retailers recognise that consumers will wait as long as they need to," said Charles O'Shea, senior analyst at Moody's Investors Service.
Only two-thirds of Americans are all or almost finished with their Christmas shopping, according to a survey by America's Research Group and Inmar.
Of those not finished shopping, consumers holding out for bigger bargains is up 25.1% from 20.8% last year, the firm said.
Analysts have said this is turning out to be the most competitive holiday season since the recession, forcing retailers to ramp up promotions. The season generates 30% of sales and 40% of profits for many stores.

HOLDING OUT FOR BARGAINS
O'Shea, who noted bigger discounts this weekend than in the corresponding weekend in 2012, said the problem was particularly acute for specialty clothing retailers.
He cited teen apparel chain Abercrombie & Fitch as one of the stores with the most noticeable increases in price cuts. Rival Aeropostale, which is trying to stanch deep sales declines, was touting up to 70% off everything in its stores on Sunday.
While electronics chains have benefited from best-selling items like Microsoft's Xbox One console and Sony's rival PlayStation 4, clothing has been a harder sell, he said.
No. 3 U.S. retailer Target suffered 5% less customer traffic over the busiest shopping weekends of the year in the wake of a massive data breach, retail consultancy Customer Growth Partners said.
Hackers stole data from up to 40 mln credit and debit cards of shoppers who visited Target stores during the first three weeks of the holiday season in the second-largest such breach reported by a U.S. retailer.
"We expect the next two weeks to pick up a lot of the slack," Topeka Capital Markets analyst Dorothy Lakner wrote in a note on Monday.
Lakner said she expects Tiffany & Co, Fossil Group and apparel retailers Lululemon Athletica and Zumiez to do better than others.

STORMS IN BRITAIN
British retailers risked missing out on the traditional pre-Christmas rush as dire weather hit the country, potentially putting off millions of shoppers holding out for last-minute discounts.
Despite huge red signs announcing sales of up to 70%, many of the stores on London's Oxford Street were quiet on Monday, with many shoppers heeding the advice of the national weather service to stay at home.
Despite tentative signs of recovery in Britain's economy, consumers are nonetheless feeling the pinch as wages have failed to keep pace with inflation.
Shoppers have also learnt from experience that the longer they leave it to buy Christmas gifts, the more shops will slash prices to tempt them.
Department stores are also seeing sales seep away to the Internet, official data last week showed, while a pick up in the housing market has meant that many Britons are spending what money they have on their homes, and not on what they wear.
Marks & Spencer slashed 30% off all clothing in order to draw in reluctant Christmas shoppers and heavily discounted other non-food products on Saturday in a flash sale that extended to Sunday, and on Monday on selected lines including men and women's jumpers.
Chief executive Marc Bolland is under pressure to boost sales after nine straight quarters of declining underlying clothing sales, although the food business has traded well.
Research from PwC found last week that 72% of 100 high street retailers were on sale or offering discounts. It said average cuts being advertised were 46%.

BREWING STORMS
Visa Europe had said it expected consumers to spend some 1.24 bln pounds on Monday, which would make it the busiest shopping day of the year on Britain's High Street.
Westfield, the owner of London's two biggest shopping malls, said it recorded the busiest weekend of the year so far, and was hopeful that with many office workers already on holiday, Monday would be busy too.
Heavy rain and strong winds were expected to disrupt road and rail travel ahead of the Christmas break across Britain, with the Met Office issuing amber weather warnings for Wales, south-west, south and east England.
Britain's biggest department store group John Lewis posted a 4.2% year-on-year increase in sales to 164.4 mln pounds during the past week, on the back of last-minute Christmas shopping.
The group said on Sunday that the Christmas trading had led to a 9.7% rise in sales in the week to December 22 from a week earlier. John Lewis said the most popular item this Christmas was the Apple iPad, with one selling at its stores every ten seconds during the past week.