Dec. 26, 2008 -- Were you wowed by the pre-Christmas sales at famously hoity-toity spots such as Saks and Bergdorf Goodman? You're not alone. This year, seemingly everything's on sale; discounts have been deeper than ever.
But some retailers have been waiting until after the holidays to offer sales. These stores' owners feel thaitat their products are unique enough that there's adequate demand for them before the holidays--and that loyal customers will scramble for the leftovers once the discounts do kick in, after the first of the year.
One proprietor taking such a chance is Debi Greenberg, owner of luxury store Louis Boston, located on Boston's famous shopping drag Newbury Street. Greenberg hasn't marked down her fall collection, but starting Jan. 7, all fall 2008 items will be discounted by 50%.
"Stores who had never done something like this were slashing prices way before Thanksgiving," says Greenberg. "But people still weren't shopping, whether the discount was deep or not."
And Greenberg wanted to ensure that her products--which include items by designers such as Marni, Balenciaga and The Row--remained valuable in the eyes of consumers. "The integrity of the store was important. I didn't need to collect the money that fast. I feel like marking down items so quickly makes the merchandise feel worthless," says Greenberg.
Behind the Sales Slump
Her hunch may have been right: Although after-Thanksgiving online sales were a bit stronger than expected (online data tracker Comscore reported that online sales grew by 7% from 2007 for the week of Cyber Monday), retail sales dropped by 1.8% in November, according to the Commerce Department.
Why the drop? The personal purchases most shoppers make during the holiday season haven't happened. Even with the Black Friday boost, many consumers are planning to spend money on themselves after the holidays, when they can get the very best deals, according to a December 16 survey conducted by Consumer Reports. Of the 1,000 adults surveyed, 44% said they planned on shopping during the days following Dec. 25, and 85% of that group attributed their plans to sales. While 66% of shoppers will be buying for themselves after the holidays, 34% plan on buying presents post-holiday.
All good things to those who wait: Consumers who head to the shops Boxing Day or later are going to be in for a pleasant surprise. While some retailers, who cut back on inventory this fall in order to cut costs might not have much to offer by the end of the year, others, like Circuit City , which is facing bankruptcy, will be practically giving away goods, according to Aravindh Vanchesan, a retail program manager at San Antonio-headquartered research firm Frost & Sullivan.
"Right now, [Circuit City] is not too worried about profit margins. They just want to hang on to remaining customers and make sure foot traffic in the store is up. And the only way to move inventory is to offer some steep markdowns," says Vanchesan. By Dec. 26, items marked down by 40% will be cut even further, sometimes reaching 70% or 80% off the original price.
Other retailers offering more robust discounts than usual include New York's linens company Leron, which is offering 20% savings on a wide selection of custom bed, bath and table lines beginning Jan. 5. Seattle's Blackbird will discount hipster brands like Nom de Guerre and Band of Outsiders from 25% to 75% starting Dec. 26. And Jeffrey in Atlanta and New York City will offer shoppers 50% off shoes from Brian Atwood and Prada, also starting Dec. 26.
Same Situation Online
The contrasting pre- and post-holiday deal strategies extend even to many online retailers. Right now, Bluefly.com--a designer discount Web site--is offering an extra 15% off every item on the site. But not all high-end online stores are throwing deals at consumers before Christmas.
High-fashion discounter Yoox.com--which has sold everything from vintage Dior to in-season Maison Martin Margiela in the past--is giving an extra 50% off certain already-reduced items, including pieces from Italian glitz label Versace and French progressive design collective Surface to Air. But the Web site, based in Italy, is not desperate to offload inventory before the holidays. While more items will go on sale starting Dec. 26, Yoox's discounts will apply only to about a quarter of its total inventory.
During the first week in December, Yoox saw a 70% increase in sales compared with the first week of December 2007. And while CEO and founder Federico Marchetti says that after-holiday markdowns are important, he believes retailers need to remember that shopping should be fun.
"It should also be entertaining," says Marchetti. "Our team of editors puts together interesting areas like the Star Dreambox," in which celebrities choose their favorite pieces from the site. "It is all about the unique selection that our buyers source from the best fashion capitals around the world."
It's that sort of approach, Marchetti points out, that can keep shoppers buying even in bad economic times and with few discounts offered. And when the discounts do show up, even more shoppers spend.
Either way, if you have some extra cash to spare post-Dec. 25, the goods will be out there for the getting--even for those with fairly shallow pockets.