Stores offer more discounts, expanded hours, but dampened holiday mood persists as clock ticks

Mae Anderson And Anne D'Innocenzio / The Associated Press
December 24, 2012

Last-minute Christmas shoppers crowd the Willowbrook Mall searching for gifts, Sunday, Dec. 23, 2012, in Wayne, N.J. This holiday season, Americans have a lot on their minds on top of the now familiar job worries. (AP Photo/The Record (Bergen County NJ), Chris Pedota) ONLINE OUT; MAGS OUT; TV OUT; INTERNET OUT; NO ARCHIVING; MANDATORY CREDIT.

ATLANTA - Last-minute shoppers crowded into U.S. malls and stores to scoop up discounted clothing and toys during the last weekend before Christmas, but many didn't seem to be in the spending spirit.

This holiday season, Americans have a lot on their minds on top of the now familiar job worries.

The Northeast is still recovering from Superstorm Sandy. Shoppers are also increasingly worried about the possibility that a stalemate between Congress and the White House over the U.S. budget could trigger a series of tax increases and spending cuts starting Jan. 1. Confidence among U.S. consumers dropped to its lowest point in December since July because of growing concerns about the economy, according to a monthly index released Friday.

And the recent Newtown, Connecticut, school shooting also dampened shoppers' spirits, analysts said.

This confluence of factors has led to a muted approach to holiday shopping — bad news for U.S. retailers, which can make up to 40 per cent of annual sales during November and December and were counting on the last weekend before Christmas to make up for lost dollars earlier in the season. The Saturday before Christmas was expected to be the second biggest sales day behind the Friday after the late November's Thanksgiving holiday.

"It's so hard to put yourself in the mood," said Linda Fitzgerald, a 51-year-old nurse who was with her 17-month-old granddaughter at The Garden State Plaza mall in Paramus, New Jersey, on Saturday. She was out Christmas shopping for the first time this year.

She planned to spend $1,500 (€1,100) on gifts such as clothes for her boyfriend, down dramatically from $4,000 (€3,000) last year. She had expected to start shopping last weekend, but simply didn't feel like it, facing a sister's cancer diagnosis and worry about the economy and the Connecticut shooting.

Similarly, Deborah O'Conner, 51, had intentions of finishing her holiday shopping early, but Superstorm Sandy put a wrench in her plans. She spent all last month helping out her parents and her cousin, whose Long Island, New York, homes suffered damage

"I had planned to be out early but it didn't happen," said O'Conner, the mother of three children, ages 22, 19 and 15. "If it weren't for the storm, I would have been done."

Marshal Cohen, chief research analyst at NPD Inc., a market research firm with a network of analysts at shopping centres around the U.S., estimates that customer traffic over the weekend was in line with the same time a year ago, but shoppers seem to be spending less.

"There was this absence of joy for the holiday," he said. "There was no Christmas spirit. There have been just too many distractions."

After a strong Black Friday weekend, the four-day weekend that starts on Thanksgiving, when sales rose 2.7 per cent, the lull that usually follows has been even more pronounced. Sales fell 4.3 per cent for the week ended Dec. 15, according to the latest figures from ShopperTrak, which counts foot traffic and its own proprietary sales numbers from 40,000 retail outlets across the country. On Wednesday, ShopperTrak cut its forecast for holiday spending down to 2.5 per cent growth to $257.7 billion, from prior expectations of a 3.3 per cent rise.

Online, sales rose just 8.4 per cent to $48 billion from Oct. 28 through Saturday, according to a measure by MasterCard Advisors' SpendingPulse. That is below the online sales growth of between 15 to 17 per cent seen in the prior 18-month period, according to the data service, which tracks all spending across all forms of payment, including cash.

Attempting to drum up enthusiasm, retailers have expanded hours and stepped up discounts. At the malls, overall promotions were up 2 to 3 per cent from last year heading into the weekend, after being down 5 per cent earlier in the season, according to BMO Capital Markets sales rack index, which tracks the depth and breadth of discounts. Many stores were running deep discounts.

But the deals failed to impress Wendy McCloskey, 35, who started her holiday shopping Sunday at the Castleton Square Mall in Indianapolis. The snow storm that blew through the Midwest this week delayed her shopping plans, and a busy schedule with her children also got in the way. She has two teenagers and a 12-year-old, and they are all involved in sports.

She wanted to buy shoes at the Finish Line online, but balked at paying $40 for shipping. In the store, she bought five pairs of sneakers for $390. But she'd expected to see bigger discounts at the mall.

"I was so surprised. I figured they'd have better deals," she said.

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Anne D'Innocenzio reported from New York. Tom Murphy in Indianapolis contributed to this report.