Retailers Extending Black Friday Deals Amid Lukewarm Demand

With year-end spending on clothes and toys off to a chilly start, worried retailers are plying shoppers with an early gift: Black Friday-style bargains extended into the first weeks of December.

Merchants get nervous each year during the dreaded early-December shopping lull, when consumers rest their wallets before swarming back into malls at the last minute – if they return at all. But this time, shoppers are splurge-shy, there’s a dearth of hot new fashion trends and the key Thanksgiving weekend failed to deliver hoped-for sales.

“This is the last thing you want to be dealing with, the lack of forward momentum,” said Columbia Business School professor Mark Cohen. “The panic is on.”

That was underscored this week by the Commerce Department’s report on November retail sales, which rose 0.7 percent from October. The increase beat forecasts, mostly because analysts “were bracing for modest disappointment, which lowered the bar of expectations,” said Sterne Agee chief economist Lindsey Piegza.

While the gauge was bolstered by strong gains in big-ticket items such as cars and home-improvement goods, sales in the categories normally popular for gifts – apparel, sporting goods and general merchandise – fell or were flat.

Earlier this week, Long Beach, Calif., animal trainer Clarissa Black, 31, ambled through Los Angeles’s Westfield Century City mall with her friend Laura Ramos of Santa Monica, Calif. Their hands were full of Macy’s, Banana Republic and Express bags – but half of the items inside were earlier purchases meant to be returned.

As scattered shoppers strolled past signs advertising 60 percent off at H&M and 50 percent off at Gap, the friends said they also spent $200 on cologne and clothing deals. But on the day after Thanksgiving, Black shopped but didn’t spend.

“Everything was on sale, but I didn’t see any garments I liked,” she said.

Such indifference has retailers breaking a sweat.

The average consumer spent nearly 4 percent less during the shopping blowout weekend than last year. On top of that, Thanksgiving’s late date this year has resulted in the shortest year-end shopping season in a decade.

In recent months, retail sales “can euphemistically be described as lackluster,” said Columbia’s Cohen.

He and other analysts interpreted November’s 0.7 percent upswing – the largest increase in five months – as a promising sign economically, in line with gains in the stock market, a reprieve from high pump prices and improving home values.

But the government numbers “run against the grain of the early holiday shopping season reports,” which have generally been less than enthusiastic, according to Credit Suisse.

Analysts also said that the swing into big-ticket retail – a 1.8 percent month-to-month increase at auto and parts dealers, and a 1.2 percent boost at furniture stores – makes shoppers less inclined to spend extra money on toys and apparel. The clothing and accessories category slumped 0.2 percent last month.

“Consumer confidence and sentiment are steadily improving, but spending remains at a modest pace,” said National Retail Federation chief executive Matthew Shay. “While it seems that the economy is improving, the future remains far from certain.”

In an attempt to keep shoppers coming, retailers are extending their Black Friday promotions into December – a tactic rarely employed to this extent. To avoid being caught in January with excess inventory from 2013, many are choosing to sacrifice profit margins by preemptively discounting this month.

Cohen said the type of bargains normally reserved for the last week of the year are “now available a month in advance.”

“This is the drowning man phenomenon – some retailers appear to be flailing around, desperately trying to keep their heads above water,” he said.

Some shoppers, however, are waiting.

Many “expect retailers to offer juicier promotions later in the… season,” according to a Thomson Reuters research report last week.