Retailers ramp up bargains for the holidays

Once a simple pleasantry, "How's business?" suddenly has become a delicate question that deserves serious consideration.

"Our honest answer has to be ... challenging," clothiers Kay and Butch Blum wrote in an e-mail to their customers last week.

The Blums, whose downtown Seattle store offers such pricey merchandise as $2,000 Moschino dresses and $1,500 Giorgio Armani handbags, are offering $250 off any purchase of $800 or more for the first time in their 34 years of doing business.

This holiday shopping season is expected to be the most difficult in decades as consumers worry about rising unemployment, tightening credit, house-price depreciation and shrinking retirement funds. Retailers already are pushing bargains usually not seen until the day after Thanksgiving, and many plan deeper discounts as the holiday sales season officially begins Friday.

Britt Beemer, an analyst with America's Research Group in Orlando, Fla., predicts one-third of U.S. consumers will go shopping Friday, and the rest will make up their minds based on advertised deals.

"We're in a major, major retail free-fall," Beemer said. "If you want to buy something on Friday, you're probably going to get the deal of your life."

Here's some of what to expect on what's likely to be one of the busiest shopping days of the year:

• Old Navy will throw open its doors at 5 a.m., offering women's cashmere sweaters for $29.75, down from $59.50. Customers who arrive early and buy at least $20 worth of merchandise will receive a $40 Samsung Pebble MP3 player for free.

• Sears Outlet stores will give away a $690 Kenmore washing machine with the purchase of a matching dryer.

• Wal-Mart will sell a 50-inch Samsung HDTV for $798 and new DVD releases, including "Iron Man," for $9.

• Kohl's will open its doors at 4 a.m. and cut prices 40 to 50 percent on a broad range of merchandise, including its most expensive clothing labels.

• J.C. Penney, which promotes the $49.99 My Sports Gaming System as an affordable alternative to the Nintendo Wii, said early-morning discounts will outnumber last year's by 20 percent. My Sports Gaming System will be marked down to $38.88.

Kohl's and Penney, as well as Macy's and Nordstrom, recently reported lower quarterly profits and warned of worse-than-expected results for the full year if troublesome sales trends continue.

Seattle-based Nordstrom said it has reduced prices by an average 22 percent on more than 800 items. A $118 cashmere scarf, for example, sells for $90, while premium denim jeans by True Religion are down to $99 from $178.

Many retailers made their holiday merchandising plans nine months to a year ago, and although they expected some sort of slowdown, they did not foresee the sharp economic downturn of the past few months, said Jim Peko, a Grant Thornton principal who works with distressed companies. Peko calls the combination of massive layoffs, tightening credit, declining home values and diminished 401(k)s the "perfect storm" for retailers.

"This holiday season, I believe, is going to be a complete washout," he said. "Unless your business is focused on nondiscretionary items, like food and toiletries, I don't think you're immune."

U.S. households expect to spend an average of $418 on holiday gifts this year, down from an estimated $471 last year, according to a survey conducted by TNS for the New York-based Conference Board. The portion of households planning to spend $500 or more on presents dropped to 27 percent from 33 percent last year.

"We're cutting back our spending plans by half," said Dale Griffin, a 46-year-old mother of three who shopped last week at Westfield Southcenter with friend Susie Close, another mother of three.

"I know a lot of families who've either lost their business or lost their jobs," said Griffin, whose husband works for a local nonprofit. "It's a constant reminder of how hard it is for a lot of people, and we could be next."

Close, 45, said she'll stay home Friday for fear that she'll get caught up in the excitement and bust her budget. "I try to make a list and not veer from that," Close said. Business at her husband's commercial real-estate firm is down, so she plans fewer holiday purchases.

"We told our kids and relatives we love them, but we're going to spend half of what we normally do," Close said. "They're fine with it, because they're aware of what Christmas is really about."

Internet retailers also are expected to step up promotions to spur holiday sales this weekend. Seattle-based Amazon.com will roll out deals including a $1,199 Sony laptop for $799 and a $999 42-inch Panasonic plasma HDTV for $699.

Shop.org, a division of the National Retail Federation, has dubbed the Monday after Thanksgiving "Cyber Monday," marking the day when many consumers return to work and shop online at their desks. A Shop.org survey found that 83.7 percent of e-commerce companies will offer Cyber Monday deals, up from 72.2 percent last year.

But not every retailer can afford to compete on price alone. At the Butch Blum store downtown, customers are urged to support locally owned retailers this holiday season.

"While a number of you have continued to shop in your normal manner, others have withdrawn. Obviously for some, this is a necessity," the Blums said in their e-mail. "To those folks who are in a position to continue to shop with confidence, we urge each of you to do so locally."

Other retailers are starting similar "buy local" movements in Ballard and Capitol Hill.

"I'm hoping people will feel better spending a little more at a local store than they otherwise would at, like, a Wal-Mart," said Jason Hughes, owner of Sonic Boom Records, which sells new and used CDs in Ballard and Capitol Hill.

Hughes is behind signs going up in Ballard storefronts warning that the economic crisis threatens local retailers. "For every $100 spent at a locally owned business," the flyer reads, "$45 goes back into the community and our tax base."

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com