Monday, March 10, 2014
The Washington Post
At 3 a.m., Christmas carols played through the loudspeaker at the Kohl’s in Silver Spring, Md. “Duck Dynasty” doormats were marked down 80 percent, and candles were discounted 50 percent. About a dozen employees stocked handbags and children’s clothing.
But there were no shoppers.
In a holiday season marked by large-scale discounts, seemingly never-ending Black Friday deals and free overnight shipping, Kohl’s is taking its efforts to an extreme, keeping stores open around the clock from 6 a.m. Friday until 6 p.m. Christmas Eve. Like many retailers, Kohl’s is battling sagging profits with a frantic attempt to draw in last-minute customers and avert a holiday disaster.
On Monday, retailers such as Nordstrom, Brookstone and Crate & Barrel were offering free overnight shipping. Bloomingdale’s was touting a new round of last-minute discounts – dubbed the “procrastinators have all the fun” sale – offering 15 percent off nearly all items through Christmas Eve.
Despite data showing that the economy is expanding at a surprisingly strong pace, it has been a tough year for many retailers, which rely on holiday spending for up to 40 percent of their annual sales. Wealthy consumers are propping up high-end retailers such as Tiffany and using cheap financing to make big-ticket purchases, including cars.
But retailers catering to low- and moderate-income shoppers are still making up ground from a dismal back-to-school shopping season and grappling with customers suffering through slow income growth and the impending loss of long-term unemployment benefits. For those shoppers, staples such as apparel and toys are still a stretch. The shorter-than-usual holiday shopping season isn’t helping, either.
“Customers are increasingly desensitized by the amounts of discounts out there,” said Brad Wilson, founder of the sale-tracking website BradsDeals.com. “It used to be that 15 percent off was considered a good deal. Now it has to be at least 30 or 40 percent to catch anyone’s attention.”
At 4:38 a.m. Sunday, Karen Byrne, 48, was the only shopper at a Kohl’s in Aspen Hill, Md.
Byrne said she hadn’t planned on shopping that early. But because she was awake and the store was open, she thought, why not?
“I’m just going to pick up a few things,” she said.
For the first time in at least seven years, customers spent less over the Thanksgiving weekend – the traditional kickoff to the holiday shopping season – than they did the year before, according to the National Retail Federation. Overall holiday spending is expected to be tepid, too, with the trade group predicting a 3.9 percent rise in sales.
“In general, retailers have not seen the sales they would like to up to this point,” said Keith Jelinek, a director at the consulting firm AlixPartners. “They are watching their sales figures on a daily basis, if not hourly, and making decisions as they go.”
Analysts say one of the most dramatic moves this year has come from Kohl’s, which is keeping nearly all of its 1,158 stores open for 108 hours. Toys R Us, Macy’s and Kmart are taking similar measures, but not for as long or at as many stores.
In the third quarter, Kohl’s posted an 18 percent drop in profit, to $177 million, while revenue dipped 1.02 percent, to $4.44 billion.
“I would not use the word ‘desperation,’ but Kohl’s has had its ups and downs in the last two years,” said Paul Swinand, a retail analyst for Morningstar. “They had a crummy third quarter, and they’re hoping to turn that around.”
More often than not, the people who stopped by area stores in the middle of the night said they were picking up one or two items – not checking off their entire holiday lists.
“It’s not busy today,” said Andrew Cheruiyot, a security guard at the Silver Spring, Md., Kohl’s store, where employees outnumbered shoppers for most of the night. “Maybe people are tired.”