By Tom Van Riper, Forbes.com
10/15/08 4:40 PM
Check any big-store Web site and you will find big-time sales.
Up to 40 percent at Gap's fall sale; 20 percent to 50 percent and free shipping for Columbus Day at Macy's; two-year, interest-free loans for big purchases at Circuit City; and at the Best Buy Outlet, a $1,299 Sony VAIO laptop for $899. Even luxury giants are practically giving away merchandise: How about an $840 Moschino striped cotton jacket at Saks marked down to $335.90?
The traditional holiday shopping season may still be seven weeks away, but discounting season for major retailers is already under way — and with a vengeance. But don't bite yet. Unless you really need something right now, the best bet is to sit on your wallet a while longer. Why? Because the deals should only get better over the next few weeks.
"I'd wait until the Friday after Thanksgiving," says Britt Beemer, president of America's Research Group, which tracks retail industry trends. "You'll find the best deals consumers have ever seen."
The best department store deals will likely be found at regional chains like Bon-Ton and Boscov's (both mainly in the Northeast), according to Anthony Liuzzo, a professor of business and economics at Wilkes University, who's been tracking holiday retail trends since 1988. Those relatively smaller chains are feeling even more of a pinch than national giants like Macy's and J.C. Penney, where markdowns figure to be big, but a bit less substantial than the regionals, Liuzzo thinks.
Overall, Liuzzo figures this Christmas will be the worst for retailers of the 20 he's covered so far. So discounts will be most prevalent in years. The one possible flaw in the theory: Stores do such a good job predicting demand and managing inventory levels that less discounting than expected will be needed. But few think prices have bottomed out.
Retailers are already coming off the bloodbath of September, when mass-market department stores, discounters and luxury chains alike turned in even worse sales performances than expected. Same-store sales were off 12 percent at J.C. Penney and 3 percent at Target. Luxury struggled too, with Saks' sales down 11 percent and Neiman Marcus falling almost 16 percent. And analysts think the worst is yet to come.
How low plasma TV sets go depends on Wal-Mart, which can use its size and reach to set the bar for the holiday season. Beemer thinks the discount giant could go as low as $599 for 42-inch sets, which would spur even bigger price cuts at Best Buy and other big chains.
At specialty outlets, "The West had the most negative results, we believe this will move toward other parts of the United States," says independent retail analyst Jennifer Black, who covers specialty apparel chains.
And for the first downturn in a while, luxury stores are far from immune. Beemer thinks upscale chains will discount their jewelry and watches by 20 percent or more, while a dearth of holiday parties will crimp demand for evening gowns, leading to the biggest Christmas sales in two decades.
"Anyone thinking about a luxury purchase will see deals like they've never seen before," Beemer says.
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