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Will Christmas Retail Sales Fall Well Short of Expectations This Year?

Aired December 19, 2000 - 4:43 p.m. ET


JOIE CHEN, CNN ANCHOR: In case you hadn't noticed, Christmas is now just six days away. This year's holiday-shopping season should be in full swing -- at least it ought to be, on paper anyway. But many stores are saying their holiday sales figures are falling below -- in some cases way below, expectations. In fact, if something doesn't trigger a buying frenzy in the nation's malls, this holiday-shopping season may be the worst in recent history.

A look at last week's numbers tell us some of the story: Apparel sales were down nearly 12 percent compared with last year. Jewelry sales dropped 22 percent. Entertainment sales -- that's music, video, home-entertainment sort of things -- that fell 18 percent. So what are retailers doing to punch up their holiday numbers? In addition to the typical holiday trimmings, many shops are posting something more: those discount signs -- "Sales, Sales."

CNN's Charles Zewe is at a mall just outside of Miami now -- Charles.

CHARLES ZEWE, CNN CORRESPONDENT: Joie, we are at the Aventura Mall, which is just north of Miami, one of the biggest malls, one of the busiest malls in the country. About 12-15 million people make their way through this mall during the year. And merchants here -- like merchants across the country -- are hoping for a big final six days of the Christmas shopping season, hoping that they can turn this Christmas shopping season into a success.


CHILDREN (singing): He knows if you have been good or bad. So be good for goodness' sake.


ZEWE: Signs of the seasons certainly out at malls across the country here, like everywhere else. But merchants are saying that their sales have not lived up to expectations. They had hoped to do 6-7 percent gains in their Christmas holiday season sales, which run from Thanksgiving to just before Christmas. Merchants, however, have been reporting the sales have been increasing by only 2.4 percent. They haven't grown that low of a pace since 1991, the recession.

And there is concern that that may be happening all over again: merchants putting up some big sale numbers, posting some big sales. But so far, the shoppers seem to be waiting, waiting until the very end to flood the malls. There are lots of people here at the Aventura Mall right now. -- two of them joining us now.

Ladies, give us your names real quick.

ATHENA, SHOPPER: Hi. Athena (ph).

CARLA, SHOPPER. And Carla (ph).

ZEWE: What have you been -- what have you done differently this year with your Christmas shopping that you haven't done in years before?

ATHENA: Same old thing: Shop! Shop! Shop!

ZEWE: Have you put off of your purchases at all?

CARLA: Well, I usually start back in October with my shopping, so -- but I was told to come to this mall just to see what is going on.

ZEWE: Have you delayed any of your purchases waiting for the better and better sales to come out?

ATHENA: Yes, I do that all of the time. That last minute, I'm going to save just that little bit more money, so I can buy more stuff.

ZEWE: Are you either of you concerned about the economy? Lots of people seem to be wondering what will happen in the new year.

CARLA: I am never concerned. I am just a shop-aholic. So I spend money. I don't know about other people.

ZEWE: Does your husband know that?

CARLA: Yes, unfortunately.

ZEWE: Thank you, ladies.

Some people aren't concerned. Some people are. Merchants, however, are hoping that this Christmas season wraps up in a big way. So far, though, the sales have continued to decline. And it does not look like this will be a record-setting Christmas in terms of sales, by any stretch of the imagination -- Joie.

CHEN: CNN's Charles Zewe for us at Aventura Mall in Florida.

While these may be some troubled times for the brick-and-mortar retailers, will the same hold true for their counterparts online. Joining us now is Jill Frankle? She is the director of, an expert in online shopping.

Jill, I don't know whether you know are an expert because you work for or because you do a lot of shopping yourself. Tell the truth, did you buy all of your holiday gifts online?

JILL FRANKLE, GOMEZ, INC.: I did not by all of it online. But a good bulk of it I did.

CHEN: OK. All right: truth in advertising here.


CHEN: Tell us about the season for the e-tailers. Has it been any better than what the retailers are seeing?

FRANKLE: I mean, I think what is happening online is, we are expecting $11.4 billion in online retailing this season. And that is up from 95 percent from last year: $5.8 billion. But I think that it's clear that online e-tailers, or the folks who are selling their wears online, are getting hit twice: both by the economy and the slowdown in retail overall, as well as sort of the investor pullback from investing in the pure-plays.

CHEN: So is this going to something of a shake-out season? Are the big players going to be the only ones left by the time we get to January?

FRANKLE: I think the shake-out has been going on for the last six to nine months. And there really hasn't been an industry sector within retail -- whether apparel, consumer electronics, pets, toys -- that hasn't been hit to date. So over the last six to nine months, we've seen companies close their doors or go out of business. And I think we can expect that into mid-2001.

That said, many of the multichannel retailers -- such as a Wal- Mart or a Target -- they are going to really benefit from that.

CHEN: Because they are jumping in. They're doing both.

FRANKLE: They are doing both. They are basically trying to leverage their physical stores, and the foot traffic that is going through those stores, into the online arena. They have brands that have existed for years that they can leverage in the online world. And, at the same time, they are able to capitalize on some of the other companies that are going out of business.

CHEN: Let's talk from the consumer point of view for a moment here. Last year, I still heard a lot of people saying: Hey, I am scared to give my credit-card number on line. I am not sure what is going happen if I send away to some place in the netherworld that I can't even see where the store is to buy something there.

Do you think that consumers are sort of getting over that fright now?

FRANKLE: I think security has not been the issue for the last year-and-a-half for most people. People have overcome the issue of security. Credit cards will guarantee -- you know, $50 is the most your are liable for, as in the offline world. So security is really not an issue anymore. I think some of the top concerns relate to privacy. And consumers are getting up to speed on that. And they are also concerned with: "Will this product arrive on time?" -- and issues of delivery. So those are really the things that are top of mind for them right now.

CHEN: Something I know about myself is that I think: Well, you know, maybe if I go to the brick-and-mortar store, I am going to see that big sale sign. There is going to some sort of last-minute sale blitz and I'm going to get a better deal. Am I going to be better off doing that? Or should I be prowling the e-tail sites with the same eye to sales or discounts?

FRANKLE: I think the point about e-commerce -- and this is something that consumers need to remember -- it's another channel through which they can interface with the company, the company that they are going to do business with. And there are going to be sales and discounts both in the offline world and in the online world. I think the value to the customer is the convenience of shopping online, or doing research online, and then going to the physical store to find that great deal.

CHEN: Well, I have to tell you, Jill, I bought most of my gifts online, mostly because I've been so busy here on CNN for the last month.


CHEN: So I hope everything comes through from the e-tail side. Thanks very much, Jill Frankle with

FRANKLE: Great. Thank you.



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