After Christmas Sales To Be Big To Make Up for Lagging Profits

Thursday, 26 Dec 2013 09:02 AM

By Michael Mullins

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After-Christmas sales are larger than usual due to a disappointing sales season this year, resulting in piles of unsold inventory that retailers need to get rid of before spring.

"Overall, the holiday retail sales season is not the best," Chris Christopher, director of consumer economics at IHS Global Insight, told USA Today. "Online is up tremendously from where it was five years ago, but everyone is hurting on the margins because of the discounting and the free shipping."

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According to Christopher, sales growth will likely be at 3.2 percent for 2013, which is the weakest since 2009.

Consequently, consumers are already seeing the benefits when it comes to further reduced prices at their favorite retailers, with some not waiting until Dec. 26 to offload their unsold inventory.

"Promotions have already crept into the irrational zone — north of 50% off," CEO of Belus Capital Advisors Brian Sozzi told USA Today. "The season so far was a full-on Debbie Downer. After Christmas a black plague of promotions will sweep throughout the malls and stores — 50, 60, 70% off."

Two examples are Old Navy, which launched its "After Holiday Sale" on Sunday offering upwards of 75 percent off, and Amazon.com, which similarly has already began cutting prices by offering 70 percent off select jewelry and clothing items.

"People just aren't spending and retailers are having to deal with that," added Steven Keith Platt, director of the Platt Retail Institute. "They have to aggressively push these huge discounts and just hope they can extend out the holiday."

Though there has been a moderate uptick in online sales, retail sales from Dec. 16 to Dec. 22 were down by 3.1 percent compared with the prior year, according to ShopperTrak.com.

Whereas brick and mortar sales were down and online sales were less than anticipated this year, mobile purchases saw a dramatic increase in 2013 with 18 percent of holiday purchases made on smartphones and other mobile devices up from 12 percent the year prior, USA Today reported.

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One retailer that has taken a significant hit in sales is Target, which was breached by hackers earlier this month, resulting in the data of some 40 million credit and debit cards shoppers possibly being stolen.

In an attempt to lure customers back into their locations and regain their trust, Target, which is the No. 3 U.S. retailer, is offering a 10 percent store-wide discount this coming weekend and free credit monitoring to any customers who want it.

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