Merchants Hold Their Breath

The nation's retailers spent a glum weekend before Christmas after a much-hoped for sales bonanza failed to materialize, though business at discounters and luxury stores appeared to be brisk, according to analysts.

The federal government's raised terror alert status was the latest headache for merchants, which are now counting on heavy shopping this week to meet their goals.

C. Britt Beemer, chairman of America's Research Group, based in Charleston, S.C., says he doubts the terror alert had a big impact on weekend sales, because many people did not know about the alert. "But it could reduce retailers' ability to have a huge business on Monday and Tuesday, and the week after Christmas," says Beemer. "It may likely make people who are close to being done decide they've purchased enough."

Some representatives of retail firms and organizations disagreed.

"Consumers learned to be vigilant, and I don't think this will have an effect" on their shopping, said Karen MacDonald, a spokeswoman at Taubman Centers Inc., which owns and manages 31 shopping centers in 13 states.

Ellen Tolley, a spokeswoman at the National Retail Federation, agreed, saying that "since Sept. 11, consumers have learned to go on with their lives," and she doesn't foresee traffic being hurt.

Traffic and business was heavy over the weekend at discounters and luxury stores. But at mid-priced department stores and mall-based apparel chains, which deepened price cuts on sweaters, jewelry and other items, sales were uneven, continuing the trend seen throughout the season, Beemer said.

"I think it was a very strong weekend, but I don't think it was as big as retailers needed," said Beemer, based on interviews with retail clients. He added that consumers "were looking at the lowest price in each category of merchandise."

At the Valley West Mall in West Des Moines, Iowa, Connie Ferree, was shopping with her mother for 50 to 60 gifts for her relatives, but she said she's spending far less this December.

"The job situation is bad," said Ferree, who has been struggling to find a job in Ames, Iowa. She said she had begun her shopping last week, and was hunting discounted items.

Despite a recovering economy, merchants struggled with modest sales throughout the season and were counting even more for a sales surge this past weekend after two weekends of Northeast snowstorms. Retailers also are holding out hope that the last-minute spending in the three days before Christmas will help merchants meet their sales goals.

"Traffic was about the same as last year, and stores were very busy," said Tolley. "And if some stores were a little short of their goal, there's plenty of time for that to change."

She noted that the National Retail Federation is still sticking to its holiday forecast for a 5.7 percent gain in total sales from a year ago.

In the past few years, the Saturday before Christmas has been the busiest day of the season. Last year, the Monday before Christmas was the second biggest sales day.

In 2002, the last week before Christmas accounted for 41 percent of holiday sales, according to the International Council of Shopping Centers.

This year, consumers appear to be waiting longer. According to the association's survey, conducted from Dec. 4-10, 10 percent of the approximate 6,800 consumers polled had completed their shopping, compared with 15 percent during the same time a year ago.

Many stores, particularly department stores and apparel stores, had refrained from aggressive discounting earlier in the season, hoping consumers would be willing to pay full price, but the strategy appeared to have backfired.

And plenty of stores added "unplanned broad-based discounts" this weekend, according to Tom Filandro, senior retail analyst at Susquehanna Financial Group. Limited Inc.'s Express, for example, offered 40 percent off on all sweaters in the stores.

Of course, that's good news for consumers like Margo Whisman, who started her shopping on Friday.

"We're just procrastinators, and that's why we get the sales," said Whisman, who was at the Mall St. Matthews in Louisville, Ky., on Saturday at JC Penney Co.

Nikeya Merriweather, who was dragging three bags stuffed with gifts, at the Gallery mall in downtown Philadelphia, said she had been Christmas shopping since Dec. 1, but had plenty to buy Saturday. And not until then could she find a good bargain.

Merriweather found a "Baby I Know" doll for her baby, discounted to $14.99, from $29.99.

By Anne D'Innocenzio