U.S. Stores Offering Bigger Discounts to Keep Up Post-Christmas Demand

Retailers are ramping up bargains in an attempt to lure in more customers and bolster holiday retail sales.

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The National Retail Federation says holiday sales will rise 3.8 percent this year, compared with a 5.2 percent advance last year.

“It’s not going to be a gangbusters Christmas,” said Chris Christopher, an IHS Global Insight economist. “People are not doing that well. What’s happening with personal income and consumption is disheartening.”

Personal spending climbed just 0.1 percent last month, while wages and salaries fell 0.1 percent from October, according to the Commerce Department.

In an effort to help move merchandise, U.S. retailers have been offering heavy discounts this holiday season, while keeping stores open longer than ever.

Almost all Toys “R” Us locations in the U.S. remained opened from December 20 to Christmas Eve — or 112 hours straight. Family Dollar Stores (NYSE:FDO) operated on Christmas for the first time, opening half of its 7,000-plus stores from 10 a.m. to 3 p.m.

Many retailers continued to dangle deep discounts right up through Christmas Eve. Kohl’s (NYSE:KSS) offered an extra 10 percent off kitchen electronics and bedding already marked down as much as 60 percent.

Many chains continued to open their doors early after Christmas. Target (NYSE:TGT) stores opened their doors at 7 a.m. on December 26, an hour before usual, with a $100 discount on a Canon digital camera regularly priced at $299.99 and lower prices on plastic storage containers. Target also cut prices on New Year’s Eve appetizers, from shrimp to pizza rolls.

But while discounts and longer hours help to move merchandise, they also threaten profit margins. And despite the plethora of bargains to be had, crowds have been sparse at some malls, at least early on.

Only about 15 people showed up for a J.C. Penney (NYSE:JCP) opening in Greensboro, North Carolina, yesterday to take advantage of the retailer’s doorbuster deal: a discount on $10 bath towels to $3.99. The Sears (NASDAQ:SHLD) parking lot at that same mall was about half full by mid-morning.

Marshal Cohen, chief industry analyst at NPD Group in Port Washington, New York, said that consumers who have held back so far will buy clothes, furniture, or appliances if they need them, as they are getting “frugal fatigue” and are “tired of not spending,” but that “the consumer is not feeling much better about the economy.”

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To contact the reporter on this story: Emily Knapp at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com