Holiday shopping season is losing some of its power

NEW YORK -- The holiday shopping season is losing some of its power in the year's sales.

November and December now account for less than 21 percent of annual retail sales at physical stores, down from a peak of over 25 percent, and experts believe it'll keep dropping.

Those extra percentage points would have translated into an extra $70 billion more in buying for last year, said Michael Niemira, principal at The Retail Economist.

The season steadily had gained in importance and peaked in the early 1980s, before the dominance of big discounters such as Wal-Mart stalled its growth as shoppers began moving away from department stores.

Still, the two-month period held its own through the mid-1990s, when online shopping for deals took hold.

"There was a mindset even before online shopping," said Niemira, whose data goes back to 1967. "But this just accelerated it."

In general, many people are shopping for the holidays all year long now, mirroring the trend for back-to-school items.

Heavy discounting has diluted sales, and with big promotions throughout the year, shoppers no longer hold off making their biggest purchases until the holidays.

This year, the contentious presidential election delayed some shoppers, and with Christmas falling on a Sunday, stores expected a bigger number of last-minute buyers. But a late rush wasn't expected to make up the difference.

"It's no longer a seasonal business," said Marshal Cohen, chief industry analyst at consumer-research firm NPD Group Inc. "It's a yearlong investment for the consumer. And retailers need to change. They have to excite shoppers early in the season and later in the season -- and all year long."

Here's what's behind the shift:

Shoppers don't wait

Stores now offer good deals throughout the year on products such as TVs and appliances, making waiting until the end of the year less appealing.

Deloitte LLP found 30 percent of shoppers planned to wait for holiday sales to buy large gifts, down from 35 percent a year ago.

"People are not holding back and waiting because they find a good price for all the things they are looking for," said Rod Sides, vice chairman of Deloitte.

Christopher Rogers, a research analyst at Panjiva, which looks at imports, said he has seen a smoothing out of imports during the pre-holiday shopping season from July to November on key items such as apparel, toys and furniture.

The shift complicates matters for retailers, which usually could concentrate their efforts on capturing shoppers during the holiday window.

Heavy discounting

With fierce competition online, particularly from Amazon, stores are trying to outdo each other and even undercutting themselves on prices from the previous year.

Shoppers have been trained to demand deals and won't break the habit.

"The heightened competition being driven by the influence of e-commerce largely is driving prices down on popular holiday items," said Traci Gregorski, senior vice president of marketing at Market Track. "Retailers know consumers frequently compare prices on these categories online and are discounting more heavily to drive traffic and sales."

One example: The average price for a TV from Oct. 1 through last week was $829.52, down from $1,009.41 during the same time last year, according to Market Track, which tracked promoted prices across 40 major retailers on over 19,000 TVs.

Rise of gift cards

Shoppers are giving more gift cards as presents, which skews holiday sales figures since they aren't booked as sales until they're redeemed. And most cards no longer have an expiration date.

This holiday season, gift cards were ranked second as a top gift, behind only clothing, according to NPD.

Gift-card sales accounted for about 25.4 percent of holiday expenditures last year, up from 13.5 percent in 2003, according to Goldman Sachs and The Retail Economist.

Experiences sought

Major department stores such as Macy's have been seeing shoppers shifting their spending away from traditional merchandise such as clothing and more toward gifts that offer experiences such as beauty treatments and other services.

NPD found 10 percent of holiday shoppers said they planned to give fewer tangible gifts than last year, and 8 percent said they would not give any tangible gifts.

About 14 percent said they will give more experiences as gifts this year than last year, the research group said.