Monday December 24, 2012

ATLANTA -- Last-minute shoppers crowded into malls and stores to scoop up discounted clothing and toys during the last weekend before Christmas, but many didn’t seem to be in the spending spirit.

This holiday season, Americans have a lot on their minds on top of the now familiar job worries.

Consumers in the Northeast and Mid-Atlantic, which account for 24 percent of retail sales nationwide, were tripped up by Superstorm Sandy. The storm hit in late October and disrupted businesses and households for several weeks.

Shoppers are also increasingly worried about the fast approaching "fiscal cliff" deadline -- the possibility that a stalemate between Congress and the White House over the U.S. budget could trigger a series of tax increases and spending cuts starting Jan. 1. Confidence among U.S. consumers dropped to its lowest point in December since July because of growing concerns about the economy, according to a monthly index released Friday.

And the recent Newtown, Conn., school shooting also dampened shoppers’ spirits, analysts said.

This confluence of factors has led to a muted approach to holiday shopping -- bad news for retailers, which can make up to 40 percent of annual sales during November and December and were counting on the last weekend before Christmas to make up for lost dollars earlier in the season. The Saturday before Christmas was expected to be the second biggest sales day behind the Friday after Thanksgiving.

Marshal Cohen, chief research analyst at NPD Inc., a market research firm with a network of analysts at shopping centers around the country, estimates that customer traffic over the weekend was in line with the same time a year ago, but shoppers seem to be spending less.

"There was this absence of joy for the holiday," he said. "There was no Christmas spirit. There have been just too many distractions."

After a strong Black Friday weekend, the four-day weekend that starts on Thanksgiving, when sales rose 2.7 percent, the lull that usually follows has been even more pronounced. Sales fell 4.3 percent for the week ended Dec. 15, according to the latest figures from ShopperTrak, which counts foot traffic and its own proprietary sales numbers from 40,000 retail outlets across the country. On Wednesday, ShopperTrak cut its forecast for holiday spending down to 2.5 percent growth to $257.7 billion, from prior expectations of a 3.3 percent rise.

Online, a last minute surge helped boost sales, which had been tracking well below the projected 17 percent growth rate for the holiday season, according to comScore, an online research company. Online sales from Nov. 1 through Friday rose 16 percent to $38.69 billion. The surge was fueled by a free shipping day event that was held on Dec. 17, according to comScore.

Attempting to drum up enthusiasm, retailers have expanded hours and stepped up discounts. Toys R Us stores are staying open for 88 consecutive hours beginning Friday at 6 a.m. through Christmas Eve at 10 p.m. Macy’s opened most stores from Friday at 7 a.m. until Sunday at midnight. And other retailers like Target and Nordstrom expanded hours at some locations.

At the malls, overall promotions were up 2 to 3 percent from last year heading into the weekend, after being down 5 percent earlier in the season, according to BMO Capital Markets sales rack index, which tracks the depth and breadth of discounts.

At The Garden State Plaza, teen retailer Aeropostale discounted all clothing and accessories by 60 percent. Charles David, Cachet and AnnTaylor had cut prices by 50 percent of all merchandise. At AnnTaylor, racks of discounted clothes had been marked down by an additional 25 percent. One dress, originally priced at $118, was marked down to $49 but with the additional 25 percent, it cost $21.30.

But the deals at the mall failed to impress Wendy McCloskey, 35, of Lebanon, Ind., who started her holiday shopping Sunday at the Castleton Square Mall in Indianapolis. The snow storm that blew through the Midwest this week delayed her shopping plans, and a busy schedule with her children also got in the way. She has two teenagers and a 12-year-old, and they are all involved in sports.

She wanted to buy shoes at the Finish Line online, but balked at paying $40 for shipping. In the store, she bought five pairs of sneakers for $390. But she’d expected to see bigger discounts at the mall.

"I was so surprised. I figured they’d have better deals," she said.