Holiday Shoppers in U.S. Focus on Bargains, Limit Gifts to Kids

By Heather Burke

Dec. 22 (Bloomberg) -- Cash-strapped shoppers were searching for bargains in the final weekend before Christmas and some were limiting their gift-giving to children in what may have been a make-or-break two-day period for U.S. retailers.

“We’re buying less stuff for each other and just overall,” Dennis Decker, a 47-year-old landscape architect, said Dec. 20 outside a Kohl’s in Douglasville, Georgia. “Usually I buy stuff for my sisters. This year I’m just going to make them some Christmas ornaments.”

Sales figures for the weekend will be released later this week. Consumers who waited for deeper discounts probably were rewarded as retailers sought to clear inventory and salvage what may be the worst holiday season in 40 years, even though their fourth-quarter profits may suffer as a result.

Gap Inc.’s Banana Republic chain advertised clothing for as much as 60 percent off. A $2,100 Marc Jacobs dress was listed at $629.95 on Saks Inc.’s Web site. Macy’s Inc., the second-largest U.S. department-store chain, offered $800 sapphire or ruby and diamond rings for $249 Dec. 20.

Online spending at U.S. retailers dipped 1 percent in the holiday season so far this year, research firm ComScore Inc. said.

Consumers spent $24 billion over the Internet from Nov. 1 to Dec. 19, compared with $24.2 billion in the same period a year earlier, the Reston, Virginia-based research firm said yesterday in a statement on its Web site.

Pent-Up Demand

The Standard & Poor’s 500 Retailing Index has shed 31 percent this year, with only two of its 27 companies gaining. The index doesn’t include Wal-Mart Stores Inc., the world’s largest retailer, which rose 33 cents to $55.74 Dec. 19 in New York Stock Exchange composite trading. The stock has gained 17 percent this year.

Toys “R” Us is cutting the price of Mattel Inc.’s Elmo Live furry red Muppet through Dec. 24 by $10 to $49.99 and reducing Jakks Pacific Inc.’s EyeClops Night Vision Infrared Stealth Goggles by $20 to $59.99.

“I do believe this is going to be one of the largest weekends in retail history,” Toys “R” Us Chief Executive Officer Gerald Storch said in an interview Dec. 19. “There’s a lot of pent-up demand, and there’s going to be fantastic deals.”

Shoppers grappling with shrinking housing prices and rising unemployment have cut back on non-necessities, pushing the U.S. economy into a recession. Consumer spending accounts for more than two-thirds of gross domestic product, and 81 percent of consumers plan to spend less this holiday season, according to a study by NPD Group Inc. released on Dec. 19.

Just for the Kids

Alex Galvez, 28, an automotive technician who works in Long Beach, California, said he lost half his income this year as the auto industry neared collapse. He was shopping for his nephews Dec. 20 at the Westfield Santa Anita mall, in Arcadia, California.

“In past years, we’d probably get 10 gifts for each of our nephews,” he said. “This year it’s probably one.”

The International Council of Shopping Centers has estimated that in November and December, sales at stores open at least a year may decline as much as 1 percent. That would be the largest drop since at least 1969, when the New York-based trade group starting tracking data.

“It’s sad for the kids,” said Galvez. “They’re used to getting a ton of gifts.”

To contact the reporter on this story: Heather Burke in New York at hburke2@bloomberg.net.