Storm May Deliver Better Deals for Consumers

Dec. 28, 2010— -- Retailers may be feeling the holiday blues as a powerful snowstorm in the Northeast keeps thousands of residents stuck in their homes. But that could also mean good news for consumers, as retailers further mark down already reduced merchandise to push inventory out their doors.

The current storm comes during what is an important week for stores and bargain hunters. Post-Christmas sales can contribute more than 15 percent of a retailer's total holiday sales, according to the National Retail Federation.

But road closures and dangerous conditions tend to deter shoppers from getting to stores.

Marshal Cohen, chief industry analyst for market researcher NPD Group, said the storm has been "brutal" for retailers, which will have to scramble to recover their lost sales.

"Because of the storm, the stores lose a chance for a first impression," Cohen told ABC News. "When consumers return merchandise, it may be the first time they enter a store or go shopping, so they see the crowds, the discounts, etc. If you lose that chance for a first impression, you lose a lot. ... Holidays just got shortchanged because of this snowstorm."

Cohen estimated that because of the snowstorm that began Sunday -- expected to be one of the top six days of retail for 2010 -- stores would lose about 0.5 percent of their total holiday sales.

Yet other experts say the blizzard wasn't enough to dampen the spirit of post-holiday shoppers, especially because so many stores opened as early as 5 a.m. and the storm didn't limit people's mobility until around dinner time.

"This storm will have a very minimum impact on the retail forecast," said Joseph De Rugeriis, senior marketing manager for Planalytics. "Stores opened yesterday between 5-7 a.m. and the storm didn't really limit people's mobility until around dinnertime."

Right before the year ends retailers tend to reduce prices in an effort to unload their inventory and make room for next season's new merchandise and products.

That desperation to offload merchandise may mean good news for bargain hunters who are not quite ready to put away their credit cards.

"What we're seeing now is that retailers are insecure about revenue. The confidence that they had in early December and mid-December is basically gone, and they're worried about getting inventory off the books, so the storm just makes that worse. It makes them more paranoid about having too much inventory," Brad Wilson, founder and editor-in-chief of Bradsdeals.com, a daily deals website e-mail, told ABC News. "They have a very legitimate vested interest in pricing it well so they can get it out."

Experts said consumers should look for deals, particularly in electronics and such perishable goods as chocolate and gourmet goods.

Prices for TVs and other electronics on sites such as Amazon are edging closer to where they were during Black Friday, Wilson said. The reason is retailers have to make way for new models, which will devalue and lower the price of the products currently on the shelf.

Could Stores Suffer From Post-Christmas Slump Due to Snow?

This year the holidays brought a retail boom that stores haven't seen in years.

The National Retail Federation predicted that holiday season sales would increase by 3.3 percent to $451 billion in 2010, compared with a 0.4 increase in 2009 and a 3.9 percent decrease in 2008.

On Monday, SpendingPulse in its latest report said that total U.S. retail sales -- excluding auto sales -- during the 2010 holiday shopping season grew 5.5 percent compared to the same period last year.

The report, which is issued by MasterCard Advisors, stated that there was big growth was in apparel and a noticeable return in spending on the larger ticket items like jewelry, luxury and even furniture.

This holiday season marked the biggest bump since 2006, and the largest total since a record $452 billion was spent in 2007.

It remains to be seen what adverse impact this week's Northeast snowstorm could have on the overall numbers. Some experts said it would divert holiday sales from December to January, but others expressed cautious optimism that it would not affect the bottom line.

Planalytics, which studies the economic impact of weather on the retail market, predicted no significant damage from the storm to retailers.

National Retail Federation spokeswoman Kathy Grannis said the impact would be confined to the Northeast, and it would have had more of an adverse effect had it occurred before Christmas, as was the case in 2009.

Internet shopping will also boost numbers, as they tend to rise when people are home experiencing cabin fever.

"One of the things we've noticed in the past five to 10 years is the rise of Iinternet shopping. It has been a big factor when consumers can't get out of their homes, especially when they are big bargain hunters and they know there are good sales," Grannis said. "If there are people who are snowbound but want to take advantage of a good deal, online shopping has become increasingly popular."

Shopping traffic declines considerably in the winter months between January and March, thanks to the frigid temperatures, while Internet shopping numbers rise.

In the summer, the opposite trend is observed, when warm weather pushes people away from online shopping and out to stores and malls.