With just hours left before Christmas, retailers are discounting aggressively to shuttle their goods out the door in what appears to be a lackluster holiday season.
“With no shortage of headlines speaking to the rampant promotional pressure, it appears 50%-off has been the price of entry this year,” Simeon Siegel, an analyst at Nomura, wrote in a note today, citing tremendous discounts at mall stores like Abercrombie, Gap, and American Eagle. “Although we believe there will be some holiday sales ‘winners,’ very few will escape the discount-driven pressures on margin.”
A number of promotions this past Saturday, known as “Super Saturday” in the retail industry, were deeper than on Black Friday, particularly on denim, he wrote. Overall, the discounting “appears worse than 2008,” and that’s expected to continue past the holidays and into January, the last month of the fourth quarter, he said.
Indeed, on Gap’s website, the retailer is advertising up to 50% off items online and up to 60% off in stores. Target’s website also says customers can get up to 50% off in stores. American Eagle tweeted today that all jeans are under $30 and it’s offering 50% off clearance items.
With six fewer shopping days between Christmas and Thanksgiving this year than in 2012 and a tepid consumer spending environment, retailers have been fighting tooth-and-nail for dollars. Kohl’s, for example, will close at 6 p.m. tonight after staying open for more than 100 straight hours.
“This year, consumers have proven they are motivated by the deal,” Marshal Cohen, chief industry analyst at market research firm NPD Group, wrote in a blog post last week. “Twenty-five percent off isn’t going to cut it in their eyes. They want deeper discounts and accessibility.” Adding to that is the idea that there aren’t many hot, must-have items this year that people are looking for under the tree, he wrote.
Research firm ShopperTrak estimated that traffic in U.S. retail brick-and-mortar stores tumbled between Dec. 16 and Dec. 22 from last year, which is supposed to be one of the busiest shopping periods of the year. But the firm still anticipates last-minute purchases to help drive a 2.4% increase in November–December sales from last year.
“We expect the largest discounts to come after Christmas, when we’ll begin to see retailers trying to shed themselves of inventory,” Bill Martin, ShopperTrak’s founder, said in an interview on Bloomberg Television on Monday.