Thursday, December 15, 2005

Shopping Crowds Seem Lighter at the Mall This Year


Something is missing from consumers' shopping lists this holiday: the mall.

With 10 days left until Christmas, the nation's 1,200 enclosed shopping centers are still struggling to drum up business. While overall holiday spending has been healthy, shoppers appear to have defected, in larger numbers than anticipated, to discount chains and online retail sites, according to newly released figures and interviews with analysts.

For December so far, customer traffic has fallen 3.3 percent and sales have dropped 9 percent, compared with 2004, according to ShopperTrak, a market research firm that monitors activity in thousands of mall-based stores.

The Commerce Department said this week that department store sales rose just 1.9 percent in November, compared with a 7.4 percent gain for electronics retailers and a 7.1 percent increase for general merchandise stores, most of them outside malls.

The latest evidence, while not definitive, points to a continuation of a shift first spotted after Thanksgiving, when big retailers like Wal-Mart Stores, Target and Best Buy - not to mention their Web sites and those of other online merchants - reported sharp increases in purchases over 2004. At the same time, spending at mall-based chain stores appeared much more sluggish.

Now, as then, analysts suggested that aggressive discounts and early store openings the day after Thanksgiving, far more widespread at discount chains than at mall-based retailers, set the tone for the rest of the shopping season.

But mall stores are not ready to write off the season. For one thing, there is the procrastination factor: Christmas falls on a Sunday this year, giving shoppers a full weekend day at the last minute. And the first night of Hanukkah falls nearly two weeks later than last year, on Dec. 25.

Moreover, several mall operators took issue with the ShopperTrak data, with at least one company openly challenging its methodology. ShopperTrak derives its traffic and sales estimates, in part, from thousands of cameras installed at malls across the country. It also includes sales data from retailers, though the process is proprietary and, mall executives say, shrouded in mystery.

"I don't think it's very credible," said William S. Taubman, chief operating officer at Taubman Centers, who predicts that sales in its 23 shopping centers will increase 5 percent over the holidays. "I don't think there is any problem with traffic."

Apparel retailers, many of them based in malls, said sales at stores open at least a year rose a respectable 3.4 percent in November. The Commerce Department, meanwhile, found that sales at clothing stores rose 7.6 percent during the month.

With different figures flying, analysts say it is too early to draw definitive conclusions.

Mall business "has clearly been weaker than expected," said John D. Morris, an analyst at Harris Nesbitt, who spent the week talking with managers at clothing retailers. "It sounds like it's really slow. These guys are banking on a big last two weeks."

In interviews, consumers said they made their first holiday shopping trips to discount chains, hoping to find bargains, and relied on the more expensive mall stores for only a handful of purchases.

Willie Baker, a 66-year-old retiree who lives outside Oklahoma City, said higher home heating costs - a $160 bill for October has already arrived - prompted him to buy toys for his grandson at Wal-Mart and Target, rather than at the nearby mall. "We don't want to spend a whole lot," he said. "So I am really looking at deals."

Retailers are working to lure shoppers back into the malls by dangling deeper-than-usual discounts. Mr. Morris, who tracks markdowns, said clothing stores at the mall had increased their discounting 10 percent over 2004.

Gap is offering $15 off denim, Aéropostale has marked everything down 50 percent and Hot Topic has taken $10 off all hooded sweaters, Harris Nesbitt found.

But discounters, led by Wal-Mart, appear to have a lock on bargain shoppers.

"Wal-Mart was louder and earlier than ever," said Bill Dreher, a retailing analyst for Deutsche Bank Securities. He attributed the chain's success to a marketing blitz that began Nov. 1, two weeks earlier than last year; low prices on electronics the day after Thanksgiving, when it sold a laptop for less than $400; and other early-morning bargains, known as doorbusters.

Scott Krugman, spokesman for the National Retail Federation, a trade group in Washington, said, "One day creates a lot of momentum. The mall stores are not set up to have those aggressive doorbuster sales."

The mall's woes, however, have not shaken the industry's confidence in the overall season.

Even Bill Martin, a co-founder of ShopperTrak, said that despite the disappointing figures in his surveys, he was not worried about the health of the season. The next 10 days, he said, "will make a big difference."

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