It's On A Sale Now

Buffalo News
Lisa Haarlander

Consumers are enjoying some of the best bargains they've ever seen at stores and malls. Many items are half-price, with coupons giving shoppers an additional 15 percent to 20 percent in savings.

But consumers should prepare for slimmer pickings during after- Christmas sales. Many retailers got burned last year with excess inventory when the economy took a turn for the worse. And this year many stores cut back on how much merchandise they ordered after experts predicted this to be a grim holiday shopping season.

"Inventories for retailers this year have been pretty lean and they won't have too much to clear out after the holiday season," said Scott Krugman of the National Retail Federation, which represents a mix of department stores, specialty chains and discounters. "Consumers who wait might get the most incredible bargain on things they might not want. Retailers must have the right amount of merchandise to meet demand, but not too much to clear out after the holiday season."

Some popular items are already sold out.

Lands' End, one of the largest mail-order retailers, won't have any more of its new all-weather moccasins available until spring. And most retailers have run out of Shrinky Dinks, the colorable shrinking plastic shapes - including the four Toys R Us stores in this area. Amazon.com has sold out of the popular Epson Stylus Photo 870 printer.

Department stores have also cut back on how much merchandise they stock.

This fall, The Bon-Ton's inventory decreased 8.5 percent compared to the same time last year. J.C. Penney Co. said its total inventory is down 10 percent from the later half of last year.

"The categories that have been doing really well we have been replenishing. You want to have the merchandise when the consumer wants the merchandise," said Mary Kerr, director of corporate communications for the Bon-Ton. "At the same time, you do want to clear your seasonal inventory so you don't have a lot of markdown exposure."

And because the economy is in a recession and consumers are buying less, retailers have been offering extra incentives to shop. At The Bon-Ton for example, the discount percentage has been the same as in the past but this year it applies to more items.

"I don't know if it can get much better," Kerr said.

How much a retailer marks down an item after Christmas depends on how seasonal it is, how much they have left in stock and how much they marked up the product. For example, retailers will nearly give away Christmas ornaments and decorations after Dec. 25. But the discounts will not be as great in housewares or apparel.

"Housewares have strong seasonal demand but people buy them year round so the store doesn't need to mark them down as much," said Doug Thomas, an assistant professor of logistics at Penn State's Smeal College of Business.

Toy and computer and video games are a different story.

"Toys are a perishable product," said Thomas, who is also a research associate with the Center for Supply Chain Research at Penn State. "They are primarily manufactured in the Asia-Pacific region and they're inexpensive to produce. After Christmas, companies can be very aggressive getting rid of them because the margin is so high."

Another place to look for after-Christmas bargains is the Internet. The deals there will probably be much better than at the bricks-and-mortar stores, Thomas said.

"Companies that do online selling tend to experience greater seasonality, which means they have a greater incentive to move the stuff after the holiday season," he said.

And it's not simple to move inventory from a warehouse designed to fulfill Internet orders to a distribution center that replenishes stores.

"The reason for the difference is that when you have an online order sent to your home, someone has to get if from the shelf, put it in a box, put in all the promotional material, label it and mail it," Thomas said. "To replenish a retail store, they just have to get the pallet or crate onto the right truck."

Consumers might always want to check out eBay to see what unwanted gifts people are trying to unload.

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REPORTERS & EDITORS: For more information, please contact Wyatt DuBois in the Smeal College of Business Media Relations Office at 814-863-3798 or wed112@psu.edu .

Penn State's Smeal College of Business offers highly ranked undergraduate, MBA, executive MBA, Ph.D., and executive education opportunities to more than 5,500 students at all levels. Featuring academic departments of accounting, finance, marketing, insurance and real estate, management, and supply chain and information systems, the college is also home to major research centers such as the Center for Supply Chain Research, the Institute for the Study of Business Markets, the eBusiness Research Center, the Farrell Center for Corporate Innovation and Entrepreneurship, the Center for Global Business Studies, and the Center for the Management of Technological and Organizational Change.

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