Businesses Slashing Prices At The Finish Line
ANDREA SEABROOK, host:
From NPR News, it's All Things Considered. I'm Andrea Seabrook. The car business got a government bailout before the holidays. More than $20 billion from the U.S. and Canada in all. Now the retail business is hoping to be bailed out too, by last minute shoppers. The coming week is make-or-break for many retailers, which is why stores are slashing already low prices by 50, 60, even 70 percent. NPR's Tamara Keith visited a Virginia mall to find out just how low they will go.
TAMARA KEITH: The Fashion Centre at Pentagon City, just outside of Washington D.C., is packed with shoppers. That's what you'd expect with less than a week to go before Christmas. According to a new survey from the National Retail Federation, as of last week, some 40 million people hadn't even started their holiday shopping, and most people aren't done.
Ms. ANTOINETTE ROBERT SMITH (Holiday Shopper): I would say I am 30 percent done.
KEITH: You're nowhere near done?
Ms. SMITH: I'm nowhere near done.
KEITH: Antoinette Robert Smith is wearing a big, furry hat and carrying a couple of shopping bags. She's retired and put off her shopping in part to see if the discounts would get deeper close to Christmas.
SEABROOK: If I can get a sale, if I wait, you know, a few days for a sale I think that's prudent, and I'm enjoying it.
KEITH: Virtually every store here has a sign out front advertising a sale. Ann Taylor - buy one get one free. Guess, take an additional 50 percent off. And at Aeropostal, 50 to 75 percent off everything.
Mr. HOWARD DAVIDOWITZ (Chairman, Consulting and Investment Banking Firm): Seventy percent off is the new fifty percent off.
KEITH: Howard Davidowitz runs a retail consulting and investment banking firm in New York City.
Mr. DAVIDOWITZ: The customers have never been more in charge. The stores have to get rid of the inventory. They've got no choice but to keep ratcheting down these prices.
KEITH: Retailers went in to this season with carefully laid plans for promotions and discounts. And in some cases those plans have been scratched in favor of even deeper discounts to lure shoppers in. Many retailers are looking to this weekend, and the next few days to save their December and the season as a whole.
(Soundbite of commercial ad)
Unidentified Man: Save $40 on this Cannon Powershot just $159.99 or save $80 in this Tom Tom GPS only $99...
KEITH: This ad started running today and will stay on the air through the week. Jim Babb, a spokesman for Circuit City, wouldn't say whether or not this campaign was a last minute addition.
Mr. JIM BABB (Spokesman, Circuit City): All retailers adjust to the times and I'm really not at liberty to discuss, you know, our pricing strategy, but retailers do respond to circumstances.
KEITH: And well, a how low can you go strategy may be a good thing for shoppers. It spells trouble for retail profits warns Adrienne Tennant, a specialty retail analyst with Friedman Billings Ramsey. She's been following the retail industry for a decade, and has never seen promotions quite like these.
Ms. ADRIENNE TENNANT (Specialty Retail Analyst, Friedman Billings Ramsey): If you give me a dollar, and I give you back a $1.50 worth of product, right? We can do that exchange all day long, but I'm losing money, but I'm still booking the revenue.
KEITH: What Tennant is saying is that the malls could be full, sales could look OK, and ultimately profits could be dismal. Tamara Keith, NPR News, Washington.