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How will consumers behave in the final stretch of the holiday season?

| Saturday, Dec. 14, 2002

NEW YORK — With 11 days until Christmas, the holiday season is again turning out to be a nail biter.

After a better-than-expected buying spree over the Thanksgiving weekend, sales dropped off more than expected the next week. Then, this past week, they showed only a little improvement, according to analysts.

The roller coaster ride has put retailers in the same spot they were last year: dependent on a late buying spree to lift them above dour expectations.

"If you don't see the rebound starting this weekend, then the season is likely to be softer," said Michael Niemira, vice president of Bank of Tokyo-Mitsubishi Ltd.

In New York, a threatened bus and subway strike could keep tourists from the city's shops during the most important week of the season. That would hurt sales of national chains, which count on their New York business for as much as 35 percent of total revenues.

Retailers hope to see more shoppers like Lenora Carter, 42, of Richmond, Va., who loves a bargain, but would "forgo discounts to not be in the last-minute rush."

But what they're getting are lots of people who will hold out for the best deal.

"People are going to stores, and getting free cosmetics and other giveaways, but we are not seeing big bags at the escalators," said Burt Flickinger, managing director of Reach Marketing, a retail consultant company. "Even customers that can afford to spend are outsmarting the stores by waiting for the best deals."

Discounting is running about one-third higher than a year, ago, according to Flickinger, who expects stores to step up discounting this weekend.

Many stores blamed stormy weather for disappointing sales during the week after Thanksgiving, but there's growing concern that the weak business is rooted in customers' frugality.

Same-store sales — sales at stores opened at least a year — are considered the best indicator of a retailer's health. And Niemira said those sales for November and December combined could fall below the low end of his range of a 2 percent to 3.75 percent gain.

According to the Bank of Tokyo-Mitsubishi's store-index, same-store sales fell 2.3 percent during the week ended Dec. 7.

A bright spot has been online sales.

Online sales soared 43 percent, from November 1 through Dec. 11, compared with a year ago, according to BizRate.com, a comparison shopping site that also tracks sales at 2,000 Web sites.

Last year, Thanksgiving weekend's sales weren't as strong as expected, and sales limped along, until a last-minute shopping spree helped save the season from being a disaster.

During the holiday 2000 period, sales sharply fell off after a strong Thanksgiving weekend. The last-minute sales surge came too little and too late, resulting in disappointing sales.

This year, merchants are facing a season that is six days shorter, adding more pressure to generate sales. And while there are number of very popular items, including such toys as Hasbro's FurReal robotic fluffy cat and Fisher-Price's Chicken Dance Elmo, there are no must-haves, which could help fuel excitement.

Stores have tried to protect themselves with leaner inventories, to avoid getting stuck with too many leftovers on Dec. 26. That has led to frustration on the part of some shoppers, who can't find some of the hot sellers.

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