The Wall Street Journal reported on October 6, 2010 by reporter Elizabeth Holmes that forecasters are predicting a better holiday season for U.S. retailers by discounting, discounting, and discounting some more.
Holiday Sales Increase
According to the article, “The National Retail Federation expects holiday sales to rise 2.3 percent over last year to $447.1 billion, the biggest increase in three years.” The expected increase is attributed to the discount pricing plans of major retailers such as Wal-Mart.
Lower stock quantities allowed retailers last year to not use discount pricing to drive people into stores and increase sales. This year, with a smaller sales spurt than anticipated with back-to-school shopping, sales have slowed indicating that the holiday season may not live up to what retailers need. So the discounting pricing structure will make a return this holiday season.
Discount Prices Drive Sales
Back-to-school sales show that children’s clothing sales were up but that the parents were not buying any clothing for themselves during the same time frame. Consumer electronics on the other hand saw some stronger growth with a 4.7% increase for the month of September over the same period a year earlier.
The article emphasized that consumers do react to pricing and that retailers are competing based on price. Some retailers, like American Eagle Outfitters, Inc, who don’t normally deep discount its clothing prices, offered two for one shorts sales in September to pull in the back-to-school shoppers.
Kmart, a division of Sears Holdings Corp, is offering layaway and a Christmas Club Program again this year to pull in shoppers. Shoppers will certainly be privy to more discounting as the holiday season progresses.
U.S. Retailers in Trouble
Some of the major retailers continue to see slower or inconsistent sales. Talbots Inc. cut its sales projections this week because they have seen “inconsistent” traffic in its retail stores. And, Saks is planning to close one of its stores in Southampton, New York.
Electronics have experienced a slowdown in laptop computer sales due in part to a sluggish and stubborn economic turnaround but also because Apple’s iPad sales have had made a dent in sales. According to another Wall Street Journal report (October 6, 2010), “Big computer chip suppliers, Intel Corp. and Advanced Micro Devices Inc, have recently warned of a weak consumer demand and lowered their revenue forecasts for the third quarter.”
Retail Stores Decorated and Waiting
All three major holidays already have floor space in many stores. Most of the big retailers like Wal-Mart, Kmart, and other discount stores are decorated from the front door to the back with holiday items for Halloween, Thanksgiving, and Christmas.
Walking through any major retail store and there are people shopping, but fewer are actually buying. Discounting prices may just be the tipping point for the 2010 holiday sales season.
