The Mind Of A Shopper

After 28 years as a flight attendant, the last few of which brought pay cuts totaling 30%, John Battelli decided it was time to move on. So last week he quit U.S. Airways--with an uncertain pension, mounting credit-card debt and hopes of growing his fledgling personal-trainer business. "My fear is that my ability to earn has fallen by the wayside," says Battelli, 53, of Westminster, Colo. As Christmas approaches, all that weighs heavily. "Come hell or high water," he says, "I'm going to make sure my children have the same holiday magic that I had as a child." He'll pay for the snowboard his teen son wants through "sheer will," and takes comfort in knowing he has a backstop of untapped home equity.

Yes, it's that time of year again, when the most prolific shoppers--and woeful savers--on earth, Americans, run amuck in stores as if they were Kris Kringle with his elves on strike. It matters little that shoppers are already neck-deep in debt or that even those doing well have cause for stress, given that sky-high home-heating bills are just a month away, inflation and interest rates are rising and the housing market is slowing--all of which is eating into most budgets or soon will be.

Yet shoppers are tossing aside such concerns, seduced by their image of what the holiday season should be, a buy-now-pay-later culture and price cutting that is so aggressive that when all is said and done, retailers may have sold a record number of things and still not made a dime. Heavy discounting is a dicey strategy, sapping profits and exhausting shoppers. An expected sale of $18 billion in holiday gift cards promises to keep the malls full in January. But then, says Ken Goldstein, an economist at the Conference Board (which tracks the marketplace), "we're in for a long winter's night."

For now, discounting is bringing shoppers out in force--literally. When a Wal-Mart in Cedar Hill, Texas, opened at 5 a.m. the day after Thanksgiving, known as Black Friday, Brittany Price, 19, was nearly trampled as she angled for a $68 DVD player. "I had to climb a display and hang on," she says. "It was funny watching people get so worked up over spending money. How often do you see that?" More and more often, it turns out.

"There is a large number of people, mainly women, who do not play sports or see much point in watching professional sports," says John Quelch, a professor of marketing at Harvard Business School. "They have a competitive spirit that manifests itself on Black Friday." Adding to the mayhem, says Lars Perner, a marketing professor at San Diego State University, is that "people are tired and frustrated" after skimping for months to pay higher gasoline bills. "It's like the people who diet," he says, "and then Christmas comes, and they overeat."

The bingeing began with a bang the day after Thanksgiving. The pace has since slowed, and the register isn't ringing much at stores like Nordstrom and Saks, which are struggling to project value and pizzazz. Not that they aren't trying. Nordstrom is offering to take your list over the phone, wrap every item and give you the whole bundle curbside. But service goes only so far when others are competing on price, says Paco Underhill, president of retail consultant Envirosell, who estimates that "10% to 15% of customers are walking out the doors of the mass merchants empty-handed."