Holiday shopping season proves disappointing one so far

Sparse crowds at malls and “50 percent off” signs offer clues as to how disappointing this holiday season is shaping up to be for U.S. retailers.
By ANNE D'INNOCENZIO Modified: December 18, 2013 at 8:36 pm •  Published: December 19, 2013

Sparse crowds at malls and “50 percent off” signs at Gap Inc. and other stores offer clues as to how this holiday season is shaping up so far: It's the most discount-driven one since the U.S. was in a deep recession. It's also the most disappointing for stores.

Sales are up 2 percent to $176.7 billion from Nov. 1 through Sunday, according to data provided to The Associated Press from store data tracker ShopperTrak. That's a slower pace than expected with days left in the season. ShopperTrak predicts sales will rise 2.4 percent to $265 billion for the two-month stretch that's typically the busiest shopping period of the year.

The modest growth comes as the amount of discounts offered by stores this season is up 13 percent from last year — the highest level since 2008, according to financial services firm BMO Capital Markets, which tracks 20 clothing stores.

The data underscores how aggressive discounting has been both a blessing and a curse for retailers. Since the recession, the only way to get Americans into stores has been to flash huge discount signs in front of their faces.

But the discounting has had unintended consequences. Shoppers become immune to the deals, so retailers must offer bigger discounts to keep them coming into stores. That erodes retailers' sales since shoppers aren't buying things for regular price. It also eats away at retailers' profit margins.

Still, analysts say retailers have created a cycle of constant discounting that they'll have to continue in order to attract U.S. shoppers, many of whom are still dealing with stagnant wages and rising costs for things like health care.

Stores are rolling out more discounts to try to attract shoppers in the final days. The number of promotional emails that seven major retailers sent for the 13-day period that ended Sunday was up nearly 70 percent from the same period last year, according to Market Track, which tracks discounts.

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