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Last-Minute Shoppers, Post-Holiday Spending to Boost the Season

Retailers can thank procrastinators for an uptick in holiday spending. And even after Santa’s headed back to the North Pole, cash registers continue to ring as a result of in-store returns and gift cards.

The National Retail Federation (NRF) reported sales were down 3.5% over the Thanksgiving holiday. And sales were softer than usual in early December.

For apparel specifically, sales dropped by 2 percent during Thanksgiving week, and they were off by 5 percent the following week, according to The NPD Group. Chief industry analyst Marshal Cohen blames deep discounting and a lackluster offering for the weak sales.

But things picked up as Christmas and Hanukkah loomed. Plus, with Christmas falling on a Sunday, the industry gained an additional Saturday shopping day.

“It was a hot start with Cyber Monday, followed by a lull for the last couple of weeks and then a big-bang finish,” Pete Madden, a director at retail consultancy AlixPartners, told Reuters.

Brick-and-mortar sales the week before Christmas rose 6.5% over 2015, according to data from analytics firm RetailNext.

Ultimately, overall sales through Christmas Eve were up 4 percent year-over-year, beating predictions, according MasterCard’s holiday spending report.

Analysts blame the lag on savvy consumers who’ve learned that if they wait, they’ll be rewarded with deeper discounts.

But the season isn’t over yet. Post-holiday is becoming its own distinct, and important, sales period.

Though returns can drag on retailers’ profits, they also provide foot traffic, a perk only brick-and-mortar locations enjoy. For online-only stores, getting rid of unwanted gifts doesn’t instigate another opportunity to engage the customer. Score one for old-school retail. On the other hand, once shoppers are in physical stores to make their returns, merchants know they just may be tempted to pick up a few things to make their trip to the mall more rewarding.

Gift cards are also an inducement to spend, both online and in store. With money burning a hole in their pockets, shoppers are back on the hunt for goods, which is good news for stores still needing to shore up fourth quarter sales or looking to overcome the January doldrums.

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To capitalize on this second round of shopping, some stores are allowing customers to return online purchases in stores, and retailers like Abercrombie & Fitch and Neiman Marcus are beefing up their early spring deliveries to capture the additional dollars.

Based on this last-minute shopping influx, Craig Johnson, president of consulting firm Customer Growth Partners, has adjusted his prediction for the season. He now expects holiday sales to increase 4.9% over last year, up from his previous estimate of 4.1% growth.

If that’s the case, the season will have been a success overall. But the NRF isn’t adjusting its projected 3.5% growth.