Last-minute shoppers give retailers relief

NEW YORK — Just weeks ago, the holiday shopping season seemed headed for disaster. But in the waning hours before Christmas, the nation's retailers got their wish, a last-minute surge of shopping that was expected to help them meet modest sales goals.

And with post-Christmas shopping to come, some malls and stores were downright optimistic.

While consumers jammed stores at the start of the season in search of discounts and hot items such as Nintendo Co.'s Wii game console, a challenging economy prompted shoppers to hold out until the end for bigger discounts.

An extra full weekend before Christmas also caused shoppers to procrastinate. In fact, Christmas Eve was expected to be a bigger shopping day than in past years because many employers gave workers the day off with the holiday falling on Tuesday.

"Normally, we're pretty good about this and don't have to do anything at the last minute," said Mark Pitney, 62, of Raleigh, N.C., as he snapped up a red-and-white Christmas sweater discounted 60 percent at a local J.C. Penney's. "But here we are."

The spree defied fears that a deepening housing slump, escalating credit crisis and higher gas and food prices would turn shoppers into Grinches, even in the end. Meanwhile, with the season plagued by a slew of recalls of Chinese-made toys that began in the summer, there were concerns that shoppers would boycott those products. That didn't happen, either.

Still, financial concerns clearly affected how consumers shopped throughout the season, forcing more to trade down to discounters such as Wal-Mart Stores Inc., according to Fred Crawford, managing director at restructuring firm Alix Partners. That trend hurt midprice apparel department stores such as Macy's Inc. and J.C. Penney Co., which have been aggressive with discounts and other come-ons. Ultra-luxury stores are expected to fare well, Crawford said.

Toy sales are expected, at best, to match business from a year ago.

"This year, all I'm shopping for are the kids, no adults," said Chevy Edwards of Raleigh, who was picking through discounted children's clothing at a local J.C. Penney store. "I just need to cut down on bills."

Those stores that didn't meet their pre-Christmas goals are now even more dependent on the post-holiday season, which is becoming more important with the increasing popularity of gift cards. Card sales are expected to hit $26.3 billion in the November-December period, up 42 percent from two years ago, according to the National Retail Federation.

"The after-Christmas period is becoming more and more important," said John Graber, a J.C. Penney district manager for the eastern half of North Carolina, pointing across the store to the spring apparel already stocked for the youth and teenage age group most likely to end up with the pre-loaded cards.

According to ShopperTrak RCT Corp., the week ending Dec. 31 now accounts for about 16 percent of total holiday sales. Stores don't record gift card sales until shoppers redeem them.

Scott Krugman, a spokesman at the retail federation, said the season is turning out as expected: The final days before Christmas and the week after Christmas "determine the holiday season," he said.

Krugman expects total holiday sales will meet the industry group's growth forecast of 4 percent. That's still below the 4.6 percent growth last year and the 4.8 percent average over the last decade.

The figure excludes business at auto dealers, gas stations and restaurants. The results also exclude online sales, which, according to research firm comScore Inc., were up 19 percent for the season despite some fits and starts. That's in line with its 20 percent forecast.

"Overall, we will pull off a pretty decent performance," said Michael P. Niemira, the retail federation's chief economist.