Retailers Slashing Prices and Opening Longer Hours in Hopes of Last Minute Sales

Retailers are rolling out the red carpet, slashing prices and increasing store hours, in hopes of driving in these last customers of the holiday. Some retailers are offering after Christmas sale prices now, Anne Taylor Shops have discounted the entire store by 60%. While sprinkled markdowns are commonplace every year, discounts across entire stores — which analysts say are more widespread than last year — suggest merchants are stuck with too much merchandise. Usually retailers begin marking down slow turning items or items that are not moving up to expectations, but rarely entire inventories.

Many retailers entered the season “with pretty optimistic plans” that shoppers would rush into stores and pay full price that did not pan out, and the final days before Christmas have retailers being “much more aggressive in terms of promotions being offered. This year Black Friday and Cyber Monday were successful, but more because of pent up demand. November retail figures disappointed and showed that consumer just weren’t purchasing before the holiday specials.

Shoppers are filling their holiday wish list with persistently high unemployment, soaring food prices, volatile gas prices and unpredictability for stocks and Europe’s debt crisis. The government yesterday said that third-quarter economic growth had not been as strong as it previously estimated, because of a drop in consumer spending on services like health care. The adjusted report was a bit strange, that health care was so over stated.

Toys “R” Us rolled out new pricing on many  items for Friday and Saturday, including ‘buy one, get one half off” on popular toys like Legos. A sampling of other promotions: Up to 70 percent off toys at Amazon; up to 50 percent off gifts at Restoration Hardware; 40 percent off almost everything at American Eagle Outfitters, Talbots, Limited and Wet Seal; and 30 percent off everything at J. Crew.

A wise economist would take this as a look at where the retailers see their holiday sale figures, at this point if they haven’t made their numbers, there is going to be a lot of red ink for year end. Unfortunately, this year, it is easy to surmise the problems and the disappointment for retailers. There has been a huge shift in the assortment and make up of consumer purchases, this year staples like underwear and sock, shoes and household items are booming, where as toys, records, video and leisure items are dropping. Gift card are booming especially in the mass merchants, where it is easy to give a gift card to a family member so they can by everyday necessitates with the cards.

Entering the holiday season, inventories had increased more than three times as fast as sales at several retailers, including American Eagle Outfitters, Aéropostale, Gap Inc., Urban Outfitters, Chico’s and Talbots. “

If inventory is growing ahead of sales growth, there is a need to be more promotional to move the goods, which is difficult for retailers if sales are down. Modern retailers project their purchases and deliveries to what is known as “just in time”. If stores have growing inventories, it hollers bad season.

Stores including Wal-mart and Toys “R” Us are offering 24-hour shopping in the days before Christmas, and many stores moved “Super Saturday,” a promotion that falls on the final Saturday before Christmas, back a week hoping to spur sales. This sale ran this past weekend and it does not look like it was overly successful

When retailers offer big they are willing to sacrifice profits for revenue.

And, after Christmas, the value of most merchandise slides. Retailers are in a bind, with too much inventory and too little sales and little prospect for the 1^st quarter of 2012. Many are hoping that the after Christmas sales will help relieve inventory buildup and give them the last minute sales they need out of red this year.