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It's beginning to look like a half-off holiday

When JCPenney set up the Christmas trim-a-tree department at Tyrone Square Mall two weeks ago, everything was marked half-price from day one.

Spend $50 at Limited, Too and many apparel stores, and they'll hand you a $25 coupon for a return trip in November plus $15 more after Thanksgiving.

Last year Mattress Firm helped prod a third of shoppers to buy big-ticket bedding by extending financing to five years.

"Now more people pay cash or debit card," said Greg Barber, a manager in St. Petersburg. "It's been slow."

Those are just a few telling signs of an upcoming holiday season that more and more retailers fear won't make liftoff. Stores didn't deploy the Christmas decorations any earlier. But, facing a deteriorating economy, they are pulling the trigger early to win sales before it gets worse.

"A lot of stores are running sales to get people to spend now, not wait," said Dawn Richter, marketing manager at Westfield Brandon.

Even before the recent stock market free fall, the credit crisis and tapped-out shoppers gave retailers pause.

The usual holiday inventory build-up was pared back. Shipments from Asia into U.S. ports are down 6.5 percent from a year ago, according to the National Retail Federation Port Tracker. Store holiday hiring projections are well below last year's 698,000 jobs, according to Challenger Gray & Christmas. In August, 41 of 100 retail chains surveyed by BDO Seidman said lenders had already tightened their credit to buy goods.

With consumer spending two-thirds of the economy, that raises doubts about any quick, shopper-led economic recovery.

"We don't see any reason for optimism in the back half of the year, so we're managing our business accordingly," said Glenn Murphy, chief executive of Gap Inc., which also owns Old Navy and Banana Republic.

Then came a seemingly bottomless stock market free fall, presidential candidates talking about economic woes and banks ratcheting credit terms tighter.

Now retailers are canceling orders. Lenders killed deals with many small Asian factories and kept suppliers from helping stores finance inventory as usual.

"The banks turned ultraconservative about revolving credit, so if you don't have asset-backed credit by now, it's all but impossible to get," said Steve Knopik, chief executive of Beall's Inc., a Bradenton retailer with 650 stores. "We're seeing some disruption in the flow of goods."

Last week, September sales results came in weaker than expected, with 74 percent of 20 chains short of their forecasts.

Sales in stores open more than a year are a common barometer of a chain's hold on its customers.

In September, declines crossed all price categories: Target, down 3 percent; Kohl's, down 5.6 percent; Nordstrom, down 10 percent; Saks Fifth Avenue, down 11 percent; Dillard and JCPenney, down 12 percent; and Old Navy, down 24 percent. Costco, BJ's Wholesale and Wal-Mart reported sales gains boosted by necessities like gas and food, but they missed forecasts. Beall's Outlets and the parent of TJMaxx and Marshalls also reported decent gains.

That prompted some analysts to reject an earlier National Retail Federation forecast of a minimal 2.2 percent gain for general merchandise sales for the holidays.

Adjusted for inflation, that would be a decline. Some experts now see a decline as deep as 5 percent and the worst holiday season since the 1991 recession. Without looser credit, they see no recovery until 2011.

"The lack of credit cuts the very lifeblood of retailers," said Burt Flickinger III, a New York retail consultant who tripled his prediction of the number of stores that will close this winter to 1,500. "Retailing has been in recession a year and has two more to go."

Once-prosperous chains are walking on thin ice this holiday season: Circuit City Stores Inc., Talbots and Borders Group.

In stores, the buzzwords this season are necessities and bargains.

"Traffic is down even at discount stores like Target because people fear they will be tempted to buy something trendy," said Wendy Liebmann, president of WSL Strategic Research.

"For this holiday the emphasis of our brand promise — Expect more. Pay Less — will be the "pay less" part," said Kathryn Tesija, executive vice president of merchandise at Target Corp.

Prices will get bigger type in ads. Messages will tout deals.

The aisles at Beall's department stores will be jammed with gifts priced at $9.99, down from $14.99 a year ago. Wal-Mart last week cut prices on 10 top-selling holiday toys to $10.

A sign at the door to Pac-Sun simply says "Sale $4.99." You have to go inside to learn it's for clearance girls tank tops and swimwear.

"The shift is to practical gifts," said Gwen Bennett, Beall's vice president of marketing. "This time, no Billy Bass plaque."

Mark Albright can be reached at or (727) 893-8252.

It's beginning to look like a half-off holiday 10/11/08 [Last modified: Monday, October 13, 2008 1:06pm]
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