West Windsor, N.J. – On Christmas Eve day, there was no wait to check out at the Target store here. Inside the nearby Ulta, a few customers were paying for last-minute gifts. Even Wegmans, the upscale supermarket in this strip center, was relatively quiet as Americans stayed in to prepare for the holiday.
For most mass marketers, the expected consumer crunch the day before Christmas never materialized. Traditionally, the Saturday before Christmas is a profit-booster for mass merchants, as shoppers dash out for last-minute gifts. But with Saturday also being Christmas Eve, shoppers skipped the stores.
“We had a mad rush on Friday. The line was out the door,” said the cashier at Ulta. The story was the same at Target, according to store personnel. But, despite that surge, the pre-holiday season racked up only modest sales gains. Most mass merchant retailers said they think holiday sales will be less than 5 percent higher than last year’s.
However, retailers are quick to point out that the month doesn’t end until Saturday. This year’s after-Christmas shopping spree is one of the most robust many chains have seen in years, according to reports from merchants around the country.
The post-holiday surge marks a change for drugstores and discounters who often were last-minute Christmas shopping venues. After-Christmas sales were once the domain of department stores.
Shoppers simplified buying with gift cards, which continue to be the biggest gainers as gift options. Once such gifts were thought of as less-than-thoughtful choices, but now most Americans value the opportunity to select what they want.
On the Wednesday night after Christmas, the Menlo Park Mall in Edison, N.J., was bustling with teenagers off from school and armed with gift cards. Markdowns were ubiquitous and consumers were looking for bargains. Briana Sanchez, 11, from Branchburg, N.J., searched through sales racks at Abercrombie to cash in a $50 gift card. Proving that specialty retailers can still sell beauty, she included the Abercrombie fragrance in her purchases. The men’s and women’s scents were mentioned as among the hottest sellers by the retailer.
The fact that consumers were cashing in gift cards immediately and in December bodes well for the year, since the cards are counted as sales only upon use.
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The biggest news at many mass merchants this year was a new program by which chains such as Rite Aid, Wawa and Shop Rite could get into the gift card action. And while a gift card from a drugstore chain might not be as scintillating as one from Old Navy, now retailers can offer gift cards from other merchants, such as Home Depot and Kohl’s. At Shop Rite in Skillman, N.J., for example, customers grabbed handfuls of Barnes & Noble gift cards for teachers rather than making a special trip to the bookstore. The cards start at $25, building in enough profit for the seller to take a percentage of sales. “We had a lot of last-minute sales of these gift cards,” said Judy Wray, category manager at Rite Aid.
Thanks to a less-than-stellar sell-through, consumers with gift cards had much to choose from as they scoured stores days after Christmas.
Beauty had a mixed year at mass this year, according to a survey of buyers. At Ulta, novelty items were big, such as Too Faced cosmetics, based on movies such as “Rent.” At Sephora, charm bracelets that incorporated beauty products were popular choices from Hard Candy. Wal-Mart had an exclusive Curious by Britney Spears gift set with music downloads.
Many Americans don’t wait for a holiday to get a new fragrance. Instead, they ask for big purchases such as iPods and digital cameras as gifts. Nevertheless, mass retailers didn’t lack the big names in fragrance this year.
Wal-Mart offered Burberry Brit, as did Sam’s Wholesale Club. Target had Beyoncé and JLo. And just about every drugstore touted Curious by Britney Spears and Jessica Simpson Treats. However, buyers said people had already purchased hot new scents such as Curious earlier this year.
Overall, retailers said fragrance sales were “OK.” Many people purchased a single item of the celebrity scents rather than gift sets. An inspection of an Eckerd and a Rite Aid in Johnstown, N.Y., following Christmas revealed substantial residuals of gift sets – even in the key celebrity launches.
Some retailers chose to keep margins healthier prior to Christmas by refraining from slashing prices 50 percent before the holiday, as some did last year. That was the tactic Rite Aid had used in 2004, but it opted against heavy discounting this year. Although merchandise didn’t appear to sell through as well as in the past, the decision to forgo the 50 percent sales will float to retailers’ bottom line.
For many mass retailers, holiday merchandising is at a crossroads. Decisions need to be made about how promotional to be before Christmas and how to move out what’s left during post-Christmas blowouts.
“People are shopping differently,” said one drugstore manager. “They buy items all year and then stock up after Christmas for next year. We’ve trained them to wait.”