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Why those Boxing Week blowouts might bomb

People peer into a closed Best Buy's storefront on Dundas and Bay streets in Toronto, Dec. 25, 2011.

Michelle Siu for The Globe and Mail/michelle siu The Globe and Mail

Rachel McHollister mapped out her Boxing Day plan well in advance of the store openings.

The 26-year-old Vancouverite enlisted her family and boyfriend to line up around 3 a.m. for a 6 a.m. store opening in Surrey in pursuit of a $28 pair of studded Lady Gaga headphones on sale with savings of $90.

The well-organized Ms. McHollister might get her discounted headphones, but many shoppers in search of Boxing Day bargains stand to be disappointed.

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With deep discounting already in place for this holiday season, shoppers hitting the stores Monday are likely to find that some prices haven't budged. Online group buying and cross-border shopping, especially after Black Friday and Cyber Monday, pushed many retailers to reduce prices well ahead of Christmas.

Those price cuts appear to have lured shoppers, despite the weak economy. Sales numbers aren't yet available for the last days of pre-Christmas shopping, but analysts and retailers expect them to show a slight uptick in spending over last year.

The higher pre-Christmas spending bodes well for retailers on Boxing Day.

"We've had a good, but not outstanding shopping season this December," said retail analyst Richard Talbot of Talbot Consultants International Inc. He expects to see that sales rose 2 per cent this month, compared to the same period last year.

Several electronics chains kicked off their Boxing Day sales early, to launch on Christmas Eve. "More and more, consumers expect us to offer deals, even when the brick-and-mortar stores aren't open," said Elliott Chun, communications manager for Future Shop Ltd., a subsidiary of Best Buy Co. Inc.

Discounting ahead of Christmas can also prompt some consumers to wait, in a bid to get the best bargains. "You end up in this game between the shoppers and retailers, and often the shoppers are inclined to wait for the best deal," Mr. Talbot said. "And, of course, that will affect the strength of post-Christmas Boxing Week sales."

Retail sales have been climbing for the past three months and recent holiday spending is up 4.6 per cent from 2010, payment processor Moneris Solutions said last week. The Retail Council of Canada estimates holiday sales will be 3-per-cent higher this year.

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South of the border, many stores saw brisk traffic last week, and Friday was the busiest shopping day of the season, according to a survey of stores conducted by mall operator Taubman Centers Inc. Sales at surveyed stores were trending up at a mid-single-digit rate for the week, on average, Taubman said, though luxury-goods stores were trending up at high-single to double-digit rates.

While sales may be better than last year, spending will still be constrained. The pent-up demand just isn't there, said Queen's university marketing professor Kenneth Wong. "I haven't seen as much hype about Boxing Day as there usually is around this time of the year," he said. "And in part, that might have to do with inventory levels because retailers were cautious about ordering too much."

That doesn't mean that shoppers won't try to score a deal anyway.

Ms. McHollister does not plan to spend more than the $1,000 she spent before Christmas for her family, but Boxing Day is "all for me."


With files from Reuters

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