With only two shopping days left, retailers have entered desperation mode, doing anything to get rid of merchandise before December 25. This retail deadline isn't meant to slight other religions. It's just that after Jesus' birthday, the inventory loses value. "With that kind of inventory, you’ve got to get rid of it. Whatever the margin is today, it’s that much lower next week and the week after when traffic stops," a CEO of a retailer who asked to remain anonymous because he did not want to reveal his store’s Christmas-baiting strategy, told The New York Times's Stephanie Clifford. With that attitude, retailers are heading into these final days as the event finals of a particularly high stakes meet.
To get people to buy, stores have taken preemptive measures, putting merchandise on sale before boxing day. "It looks like 40 percent is the new level you have to be at, 40 percent off, to drive traffic," explained Paul Lejuez, an analyst at Nomura Equity Research to Clifford. Walking through the mall, Lejuez noted massive sales all over the place, including half off at Ann Taylor and 50 percent off at Gap. From personal shopping experience, even higher end stores like Anthropologie are having 50 percent off sales, where we got three going out tops and a sweater for under $100. Deals like this don't come along often and especially not before Christmas.
But this year's holiday shopping tale has another side. Online retail is up 15 percent from last year, with shoppers spending $32 billion as of last Monday. Unfortunately, this is part of the problem for traditional stores trying to move merchandise, as it has caused a race to the bottom. Internet shopping provides a price transparency that old-school store shopping doesn't -- the Internet makes price comparison effortless. And with the proliferation of price-scan apps, retailers -- both physical and virtual -- have to compete with the lowest common denominator, as we saw with Amazon.com and book stores. 44 percent of shoppers have smartphones, reports The Wall Street Journal's Dana Mattioli. Analysts expect mobile retail to climb from $3.4 billion in 2010 to $8 billion this year. And a May survey of 3000 people found 40 percent had searched for a better deal with such apps, found AlixPartners. And that wasn't during a time when people do bulk shopping. With people able to have an in store tactile experience only to search online for the deal, box stores have had to compete with online retailers. "Our pricing has to be very competitive," Best Buy's Chief Marketing Officer Barry Judge told Mattioli. "We know what Amazon's price is on everything they sell."
With the online market pushing down prices for everyone, and a general dismal economic climate the shopping season hasn't gone too well. Though Black Friday and Cyber Week broke sales records, the ride didn't continue. In the two weeks after Thanksgiving, shopping didn't pick up, according to the International Council of Shopping Centers. These are the stats influencing the 50 percent off sales, which we can't say we hate. But as a marker for the state of the current economy, it scares us.