December 26, 2004


Stores slash prices further the day after Christmas (ANNE D'INNOCENZIO, December 26, 2004, ASSOCIATED PRESS)

The nation's merchants cut prices even deeper on Sunday, the day after Christmas, in hopes of squeezing more sales out of what's winding up to be an unimpressive holiday season.

After struggling with disappointing holiday sales, retailers were cheered by stronger sales at the nation's malls this past week, but are relying even more on shoppers to do more buying-- and less returning-- in the week after Christmas to meet their sales goals. And with the ever increasing popularity of gift cards, merchants hope customers will quickly use their gift cards, which are recorded as sales only when they are redeemed.

The only few bright spots have been online shopping, with sales at the high end of projections, and luxury stores, which have continued with robust sales from their well-heeled customers, who have benefited from the economy's recovery.

That means merchants are once again finding themselves in the same position as they were last year, relying on the final days before and post-holiday sales to save the season. Last year, a late spending surge gave struggling retailers a better-than-expected holiday season, delivering them solid gains over the year-ago period.

There's no room in a deflationary economy for the kind of profit margins they were trying to gouge out. A small, entirely subjective, and hideously self-referential example: The Wife sent me to Borders the other night to get 12 x $25 gift certificates for hospital staff; figured I could hide a book on such a big bill; Marilynne Robinson' Gilead is getting great reviews so I checked it out--$23; came home and ordered it from Amazon for $13.80.

Posted by Orrin Judd at December 26, 2004 10:23 AM

So wouldn't it have been best to ditch Borders altogether and buy Amazon gift certificates, too? YOU wouldn't spend any less, but your wife's colleagues would get a more valuable gift.

Posted by: Semolina Pilchard at December 26, 2004 10:27 AM

Had we thought of it before Thursday, yes.

Posted by: oj at December 26, 2004 10:44 AM

Well, you still did better than me. All shopping took place Friday. By the skin o' me teeth.

Posted by: Semolina Pilchard at December 26, 2004 11:02 AM

I did everything on line this season and saved about 15%, including delivery, plus I didn't have to deal with the crowds. What I did was go to the malls, take some notes, review the fliers, and then go on the Web. No lines, no noise, no odors, it was just great.

Posted by: Bart at December 26, 2004 11:33 AM

Supposedly, there's an overhang of about $17 billion in gift certificates sold before Christmas but expected to be redeemed by the end of January -- at discount prices.

This is the sort of thing beloved of economists, in which the market gets around an artificial time constraint (Christmas) by allowing people to "option" Christmas gifts. It is good for the recipient, because they get what they want. It is good for the store's cash flow, as they get the cash up front but don't have to recognize the sale until the certificate is cashed in.

Posted by: David Cohen at December 26, 2004 5:19 PM

Here in Tennessee, we pay 7% state sales tax + 2 3/4% local option sales tax. Books-a-Million is a bit cheaper than Amazon, ships free, and from Alabama instead of the West Coast. I haven't spent money in Borders, Barnes and Noble, etc. in three years.

Posted by: Dan at December 27, 2004 2:45 PM