The Breakdown

Explaining Southern California's economy

Retailers try to boost holiday sales before the end of 2013

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With the New Year just around the corner, retailers are slashing prices on items to get customers to use up their gift cards before 2013 is over.

Retailers had expected modest sales growth during the holiday season and the next few days will be an effort to increase revenues even more, said Bill Martin, founder of ShopperTrak, a Chicago-based analytics firm.

"Everything up to Dec. 31 is going to count in the holiday season. Retailers are wanting to make the season as strong as possible so these last few days are still important because they are additive to the numbers they've generated already," Martin said.

November was a strong month for retailers, as many stores promoted Black Friday even earlier this year. But December performance was weaker, with retail sales flat or even at a decline, Martin said. He expects holiday retail sales will increase 2.4 percent this year, but that depends on how well retailers do in the next few days with gift cards and post-holiday shopping.

Dec. 26 is the seventh busiest holiday shopping day in sales, according to ShopperTrak. Dec. 28 ranks as the tenth busiest holiday shopping day in sales, the firm said.

Holiday retail sales growth has declined year after year since 2010, Martin said. That could be because customers are buying larger ticket items like houses and cars and those payments have taken money away from presents under the tree, he added.

Gift cards could boost sales

Stores are trying to sweeten the deal by slashing prices on holiday-related items and offering more gift cards.  For example, on Friday, Best Buy had a deal giving customers a $15 gift card for purchases of $100 or more and JCPenney offered a $10 coupon for purchases of $25 or more.

"The discounts seem a lot broader," Martin said, adding retailers are eager to make way for new merchandise. "You walk down the street, you see windows signs are plastered with 50, 60, 70 percent off. It's all a desire to clean the shelves."

Retailers want customers to spend the gift cards they got for Christmas. Until shoppers use their gift cards, it's not counted as part of a retailer's sales, Martin said. It's counted as a liability, because the retailer is still liable to provide the merchandise on a gift card.

The National Retail Federation said eight in ten shoppers planned to buy at least one gift card during the holiday season. The federation estimated gift card spending would reach a total of nearly $30 billion.

Stores can also get some additional sales through people returning unwanted gifts. It's possible those shoppers may see something else at a store that catches their eye, Martin said.

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