Holiday shopping season forecast: consumers fight for deals

Mon Oct 5, 2015 11:51am EDT
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By Kylie Gumpert and Siddharth Cavale

NEW YORK (Reuters) - U.S. retailers enter the holiday season vowing to control discounting that has wreaked havoc on their results in the past, but competition between stores, consumers trained to expect discounts and a still-recovering economy point to a difficult year.

The holidays are the most important time of the year for retailers as well as some shoppers: about a third of some stores' profits are made in the last two months of the year, and discounts can make or break those results.

A new forecast from market research firm NPD indicates that holiday shopping could show the slowest year-on-year growth since 2009, and a survey from consultant PricewaterhouseCoopers shows shoppers are increasingly looking for deals. Both were provided exclusively to Reuters.

High-end retailer Nordstrom ended the summer saying it planned 20 percent fewer clearance days this year than a couple of years ago, with another 25 percent reduction next year, as it focused on service and "differentiated" products.

Teen apparel retailers such as Abercrombie and Fitch and Aeropostale said they would concentrate on offering more items at full price and minimize promotions. Last year's deep price cuts reflected the need to get rid of logo-centric clothes, which rapidly fell out of fashion. Bohemian-style apparel and floral designs will be more likely to sell at full price, they said.

Retailers that can distinguish themselves with distinct or personalized products and services have a better chance of boosting margins than broad discounters, experts said.

PricewaterhouseCoopers expects health and wellness products, athletic apparel and select electronic items like Apple Inc's iPhone and high-definition televisions to be hot this year, for instance.

But better products and inventory management, two of retailers' most talked-about tools for keeping prices high over the holidays, have to compete with buyers' memories of years of price cuts of 50 percent or more.   Continued...

People are reflected in a mirror as they shop during Black Friday sales in New York November 29, 2013. REUTERS/Carlo Allegri