Christmas Pricing

Halloween has just finished, but already we’re seeing prices for holiday ornaments slashed in half at J.C Penney and pricey toys at Wal-Mart marked down to $10 a pop. Home Depot skipped Halloween altogether, piling up Christmas trees by early October.

Retailers always engage in some Christmas calculus to get you to loosen your wallet during the holiday season, but this year it feels a little more desperate. Stores are starting their promotions earlier in the hopes of luring in customers quickly to spend money — before they’re tapped out or the markdowns get any steeper. Black Friday, the Friday after Thanksgiving, is the traditional kick-off of the holiday shopping frenzy, and it will still be the biggest sales generator of the season. But don’t sweat it if you can’t shop that day. “We will start to get Black Friday level deals every week,” says Brad Olson, owner of GottaDeal.com, an online bargain site.

For many retailers, holiday sales account for as much as 40% of their annual revenue and up to 80% of their profits – hence the name Black Friday or the day when stores traditionally go from being “in the red” to “in the black.” That’s an overstatement, but with holiday forecasts predicting flat to 1% sales growth – according to Bain & Co and Archstone Consulting respectively – retailers are anticipating one of the toughest holiday shopping periods in decades. Consumers cut back spending in the July to September quarter by the largest amount of 28 years as they grappled with a tanking economy, tightening credit and looming lay-offs. 

The key retailers will be managing inventory smartly. The economy has been braking for months, so many stores have already adjusted inventories accordingly. So far, Sears, which has been struggling, is leading the promotional pack, announcing 450 door busters, or specially priced items, from 5 a.m. to 11 a.m. on Black Friday. Shoppers will find deep discounts in electronics, like a Sony Blu-ray Disc player for $180, down from $300, and a 46-in. Sharp LCD HDTV for $900, reduced from $1400. Although Wal-Mart already marked down 10 toys to $10, from butterfly-winged Barbie Mariposa to Fur Real Newborn Animals, its full Black Friday prices won’t be announced until November 24.

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