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More stores try marathon hours for holiday shoppers
NEW YORK -- Just as they did at the start of the season, more stores are pulling marathon hours in the holiday season's finale. But with hardly the crowds at 4 a.m. as there are at 4 p.m., are the extended hours worth it?
Experts say yes, noting the additional labor costs are minimal compared with the goodwill stores enjoy by offering a convenience to time-starved shoppers.
"It makes sense, and cents, especially this year," said Stifel Nicolaus analyst Richard Jaffe.
The all-nighters, which have been gaining ground in the past three years, show how nervous retailers are trying to grab last-minute shoppers in the final hours of a season that's expected to be dismal.
Starting this past Friday, the Toys "R" Us store in Manhattan's Times Square is keeping its doors open for 134 hours straight until Christmas Eve. Macy's, which only had several locations in the New York metropolitan area open 24-7 last year, now has 13 stores in areas like Chicago, Washington, D.C., and Detroit that are pulling all-nighters in the final days before Christmas.
Marshal Cohen, chief industry analyst at market research firm NPD Group, believes retailers have no choice -- because if "you don't do it, you are giving up your share to someone else."
Besides the bleak economy, retailers this year faced a holiday shopping season that had five fewer days than last year between Black Friday and Christmas. Meanwhile, a major winter storm that cut across the country stalled sales for the critical last weekend before Christmas. ShopperTrak RCT Corp. estimates that the final weekend accounted for 11.5 percent of holiday sales last year. Jaffe estimated 35 percent of the retail market was affected by mall closings or delayed openings this year.
"Stores are hoping they will pick up sales that they might not have had," he said.
In many cases, stores open 24 hours during the holiday season already have workers in overnight stocking the shelves and cleaning -- so opening the shop for customers requires only minimal sales help, said Joel Bines, director at consulting group AlixPartners. Electricity costs are not a big issue, since stores are paying off-peak rates.
"The big question is whether you actually increase customer traffic and sales or are you spreading it out," Bines said. He believes in a normal season, stores are just spreading out the sales.
Ken Perkins, president of research company RetailMetrics LLC, noted that the incremental labor costs of expanded hours aren't going to hurt profit margins as significantly as the dramatic markdowns are. He noted that it's better to shoulder some of the extra costs to sell more merchandise before Christmas, because afterward stores have to mark down the items another 10 percent to 20 percent -- which will depress fourth-quarter profits even more.
Stores are expected to post an 18.8 percent decline in fourth-quarter profits, marking the seventh consecutive period of profit declines, according to Perkins. He expects profits to keep tumbling into the first quarter, with predictions so far of a 10.4 percent drop.
For some merchants, the jury is still out. Toys R Us spokeswoman Kathleen Waugh said the company decided to keep the flagship store in Manhattan open because it was already open all night to receive shipments, and is in the "middle of all-night activity" in Times Square.
"It was an easy decision," she said.
Still, the company will be doing a major review of all its promotions including the expanded hours, to see if it makes sense to be repeated, she added.