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Retailers start cutting prices after shoppers stayed home in October
BY ANNE D’INNOCENZIO The Associated Press

    NEW YORK — After slashing their spending in September as the financial meltdown intensifi ed, shoppers went into full retreat in October, spooked by rising layoffs and shriveling retirement funds.
    Retailers reporting October sales data for established stores next week expect to see the weakest performance for that month since at least 1969 — in many cases percentage declines in the mid-teens — and are frantically cutting prices even more to pull in shoppers.
    “Consumers just stopped shopping,” said Michael P. Niemira, chief economist at the International Council of Shopping Centers.
    That is only raising more worries about the holiday season and the financial health of the industry, which has seen a string of liquidations from Mervyns LLC to Linens ’N Things. Men’s Wearhouse Inc. is slashing prices on all leather jackets and selected sweaters by 50 percent, while Saks Fifth Avenue is cutting some women’s fashions by 40 percent.
    Kmart, a division of Sears Holdings Corp., is giving shoppers for the first time a jump-start on Black Friday deals, starting this Sunday. Kmart, which said it had planned the deals before September, will be offering weekly savings of 25 percent to 50 percent on 15 home electronics items through Nov. 23. Meanwhile, J.C. Penney Co. is already cutting prices on its tree ornaments.
    Stifel Nicolaus & Co. analyst Richard Jaffe describes many of the discounts as “unplanned and extreme.”
    With the economy expected to deteriorate, the goal is to get consumers into the stores as early as possible to spend on holiday gifts, while trying to clear out fall merchandise piling up. While shoppers are expected to buy for their children this holiday season, they may not buy much else, and economists say spending will remain weak at least through early 2009.
    The good news is that gas prices have receded in recent weeks, but there’s not much else to cheer about as Americans feel the pain from the financial meltdown, from tightening credit to mounting layoffs. Job security is a key factor in consumers’ ability to spend.
    After posting a lackluster 1 percent gain in same-store sales in September, according to the ICSC-Goldman Sachs index, many analysts expected October’s performance to be weak, but not this bad. Niemira estimates that same-store sales will fall 0.5 percent, the weakest October performance since at least 1969, when the index began. Excluding Wal-Mart Stores Inc.’s figures, that number could be down as much as 3 percent, according to Niemira.


MARK LENNIHAN/THE ASSOCIATED PRESS
Shoppers leave a Williams-Sonoma store in New York City earlier this year. Like many retailers, Williams-Sonoma Inc., lowered its profit outlook this week and offered downbeat sales estimates for its businesses.