Latest fad in Christmas shopping: Staying open all night long

Retail employees are used to working long hours during the Christmas shopping season, but usually the stores will close for a few hours each day. Anyone brave enough to enter a retail store this close to Christmas knows why — the shelves need restocking, the floors need cleaning, and someone has to get a little sleep. Only supermarkets and convenience stores make enough sales in the wee hours of the morning to justify the cost of round-the-clock operations, and even then those stores are usually only in higher-population areas.

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This Christmas season, though, a couple of major retailers plan to keep the doors open for several days, right up to Christmas Eve:

Here’s some welcome news for all the procrastinators out there.

Catering to last-minute shoppers, Toys R Us said Monday that it will keep its doors open for 87 hours straight leading up to Christmas. …

“With only eight shopping days remaining until Christmas, we are offering customers extended, uninterrupted time in stores, providing them the opportunity to shop whenever is most convenient for them,” said Troy Rice, Toys R Us’ executive vice president of stores and services.

Locations nationwide will open Saturday at 6 a.m. and remain open until 9 p.m. Christmas Eve. They will also offer shoppers the option to buy items online and pick them up in-store within an hour.

It’s probably not welcome news to Toys-R-Us managers, and not for the corporation itself.  The accumulated debt of the venerable childrens’ toy store has become a lot less attractive recently, and Moody’s already has its paper in junk status. They need a big Christmas to get them out of the hole, but history is already working against them:

Bond market watchers at Moody’s Analytics—a separate arm of the company from the group that actually rates the bonds—have been watching the dropping prices carefully. They say the price declines “imply that investors may well consider the upcoming holiday season to be a make-or-break time for the company.”

In fact, Moody’s analysts say Toys “R” Us bonds are trading at such low prices, you’d typically expect to see them on the bonds of an entity with a single “C” credit rating. That’s four notches lower than the “Caa1″ rating that Moody’s credit-rating arm has assigned to Toys “R” Us.

“Single C is the lowest notch on the ratings scale,” said Jerry Tempelman, an analyst with Moody’s Analytics who’s been watching the performance of Toys “R” Us securities. “Even Caa1 is considered deep junk, but single C is as low as it gets.”

According to Tempelman, Moody’s Analytics looked at some 262 other instances when such a four-notch negative discrepancy has occurred since 1999. The result? Around 80% of the time, the company had defaulted within three years.

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The debt comes from a leveraged buyout a few years ago, which was supposed to be resolved with an IPO in 2010 taking the firm public again.  Toys-R-Us finally dropped that plan in March of this year, and investors have soured on it since.  The move to a 24-hour operation makes a lot more sense with this context in mind — they have to capture the public’s imagination, and score as much traffic as they can.

But Toys-R-Us isn’t the only retailer with this idea. The discount department store Kohl’s, which is a lot healthier than Toys-R-Us, announced almost two weeks ago that they would do the same thing:

In the wake of a Black Friday weekend that pushed retailers’ hours earlier and earlier—in many cases leading to Thanksgiving Day openings—Kohl’s said Thursday that it will extend its holiday schedule to 24 hours a day at most of its locations in the days leading up to Christmas.

For the first time ever, the retailer will open its doors at 6 a.m. on Friday, Dec. 20, and keep them open until 6 p.m. on Christmas Eve—meaning they will be open for more than 100 straight hours. Last year, stores were open from 6 a.m. to midnight leading up to Dec. 24.

“The holiday season is an eventful time for families, and Kohl’s is making it easy for shoppers to wrap up their last-minute gift giving,” Michelle Gass, the retailer’s chief customer officer, said in a release.

Because of the shortened calendar—there are six fewer days between Thanksgiving and Christmas this year compared with last year—retailers are coming up with new ways to steal share from competitors and bring shoppers into their stores. These include extended hours and dramatic price cuts.

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Toys-R-Us and Macy’s did this last year, when it was more of a novelty.  This is starting to look like a trend, especially in the highly-competitive one-upsmanship world of retail.  It won’t be long before other retailers look at the lost opportunities in the graveyard shift and start keeping doors open as well, just as it hasn’t taken long for Thanksgiving Day to become a competitive retail shopping day.

Let’s poll readers. Would you take advantage of all-night Christmas shopping, or would you stick with the usual retail hours?


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Beege Welborn 5:00 PM | December 24, 2024
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