- Retailers had hoped to clear out their glut of inventory this holiday.
- But a “bomb cyclone” before Christmas kept people home and dampened some of the biggest shopping days of the year.
- With one more week before fourth quarter ends, stores are luring shoppers with mega sales.
If you didn’t get that gift that you wanted this holiday, there’s a good chance you can still snag it before year-end. And better yet, at an even steeper discount.
An arctic blast that produced extreme cold, rain, heavy snow and high winds across the U.S. the week before the largest gift-giving day of the year, Christmas, likely kept many last-minute shoppers at home. That’s bad news for retailers who, again, might be left holding more inventory than they want at this point in the year but good for consumers still looking for bargains, analysts said.
Retailers were already inundated with a glut of inventory heading into the holiday as unsnarling supply chains unleashed a bevy of late-arriving merchandise just as inflation reached a 40-year high to squeeze consumer spending. They had hoped to clear much of it with earlier holiday sales and a final push in the final week before Christmas, especially since shoppers got an extra full weekend this year to spend. Then Mother Nature stepped in.
“We could see some big discounting with retailers desperate to clear the inventory now,” said Sonia Lapinsky, a managing director in the retail practice at global consulting firm AlixPartners. “Once we get into January, it becomes “dead time” for retailers.”
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How much spending was lost because of the ‘bomb cyclone’?
Before severe weather from the “bomb cyclone” hit, 52% of consumers had planned to shop the week before Christmas, according to the National Retail Federation (NRF).
The Friday before Christmas was also predicted to be the second busiest day behind Black Friday after Thanksgiving, according to Sensormatic, which provides retail insights and solutions to businesses.
However, “we suspect retailers likely experienced worse-than-expected traffic trends across the nation as the well-reported “bomb cyclone” winter storm likely kept shoppers out of stores,” said Morgan Stanley equity analyst Alex Straton in a report. And because the frigid temperatures, snow and rain peaked in the final days before Christmas, “eCommerce demand may not be enough to offset likely poor in-store sales results.”
That combination could lead retailers to barely hit or even miss their fourth-quarter sales estimates, making what happens in the final week of the year vitally important, he said.
What happens now and how can consumers benefit?
Bigger and better sales.
Post-Christmas sales aren’t anything new, but they could be better than usual this year because “retailers could be forced to offer deeper discounts post-Christmas to clear through excess inventories,” Straton said.
Not only is it costly to store loads of inventory, but there aren’t a lot of items retailers can hold for a year because styles and preferences change, Lapinsky said. Retailers need to make space for fresh inventory.
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Before the holiday, NRF expected 70% of consumers to continue shopping after Christmas, with 47% planning to take advantage of sales and promotions. Many will also use gift cards or cash from returns to fund their purchases this week.
Where could we see the biggest bargains?
Those little luxuries that fell by the wayside when consumers had to tighten their belts amid the highest inflation in 40 years could be affordable now, analysts say.
Clothing and accessories are among the big ones, and it’s not just the leftover ugly Christmas sweaters and candy cane earrings that you’ll find. Going into year-end, inventory at top clothing stores had spiked 30% more than last year and 26% from 2019, Lapinsky said.
“They’re going to have to clear it,” she said, making this an opportunity to restock holiday items, finish off your kid’s wish list or even buy a few things for yourself.
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Target started an aggressive post-Christmas sale, blanketing television and print media with “The Target Clearance Run,” which began Dec. 26. The sale features half off on thousands of home essentials, clothing staples and shoes, jewelry, toys, cosmetics, and deals on other must-have New Year’s Eve items.
Department stores may also have mountains of inventory to unload. Major department stores saw weaker-than-expected foot traffic despite higher discount activity than last year, Straton noted. For example, Nordstrom’s is offering an additional 25% off and Bloomingdale’s an extra 30% off some clearance items.
Other big sales can be found here.
Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
