Big hopes for 'Day After'

Retailers - both online and traditional - are pinning increased expectations on Dec. 26.

On the day after Christmas:

• Salt Lake City resident Brent Jensen plans on being anyplace that offers "75 percent off."

• EBay is expecting a big day as unwanted gifts are placed on the Lazy Susan of retailing.

• KB Toys is among the stores gearing up for an onslaught of gift cards.

Indeed, Americans have made the "Day After" one of the strangest - and biggest - shopping days of the year. Retailers think Dec. 26 may be even bigger and more frenetic than normal since this year it coincides with Hanukkah.

A big day would cap a season that looks as if it will be solid for retailers - only slightly less vibrant than last year.

"A good holiday season means great things for the economy since consumer spending makes up two-thirds of the gross domestic product," says Scott Krugman, a spokesman for the National Retail Federation in Washington. But, he adds, "It could create something of a slowdown in the beginning of next year if consumers are really splurging right now."

It's a day that retailers plan far ahead for, but they also have to make decisions on the spur of the moment. "We make decisions on what will go on clearance at the last possible moment," says Ernie Speranza, chief marketing officer at KB Toys in Boston.

For many stores, Dec. 26 is also one of their most challenging logistical days. Customers arrive with returns, others are looking for bargains, and yet more are redeeming gift cards. "You have to plan your labor deployment far in advance," says retail expert Tom Dowdy of the Radiate Retail Group, based in Sarasota, Fla. "It's a day with a lot of decisions."

One of those decisions involves the parking lot. For example, in Henderson, Nev., the Galleria at Sunset opens at 7 a.m. By midmorning, the 6,000-car parking lot will be full. A full lot requires more security officers, says Vicki Rousseau, director of marketing for the mall.

It's not just cars that need tending. "When we're full, the housekeeping efforts are huge. There are more spills and bathrooms that have be cleaned up," says Ms. Rousseau.

Still, merchants need the crowds to help move merchandise. "Manufacturers would rather sell at a discounted price than take a product back," says Mr. Dowdy. "Many retailers need to make room for spring clothes, so they need to get rid of their winter merchandise."

The "Day After" phenomenon has practically spawned an entire industry: There are now merchants who buy the returned sweater that's the wrong color and the toys that are too complex for Mom or Dad to put together. One of these companies is Greatbuy.com, which pays retailers pennies on the dollar for their returned or exchanged goods.

"It gives us our merchandise for the next six months," says Brent Dill, owner of Greatbuy.com, which is located in San Luis Obispo, Calif. "The day after Christmas is Christmas for us. Everyone making a return is giving us a present."

Not all unwanted goods will be returned to stores. An increasing number of gifts are ending up for sale on websites such as eBay. Some of the most widely sold items that day have been knickknacks, fruitcakes, and exercise books and videos.

"We know the day after Christmas is one of our busiest days," says Jim "Griff" Griffith, dean of eBay education in San Jose, Calif.

Some products are actually sold faster after Christmas. Last year, Dec. 26 was the biggest day of the year for PhotoBlocker, a high-gloss spray paint for license plates that is so reflective it blinds red-light cameras.

"It's a conversation piece, and when someone says it was in their stocking, other people want it as well," says Joe Scott, vice president of PhantomPlate in Harrisburg, Pa., which makes the product.

Many consumers will be hitting the malls with their gift cards. This marks a major change from five years ago, when many Americans considered a "gift certificate" a sign that the giver didn't take the time to find a present. "Now, they have taken on a life of their own," says Mr. Speranza of KB Toys.

Retailers, in fact, love the cards because they find that consumers often spend more than their value. Speranza says the toy store's research finds that for every $1 on a gift card, shoppers buy $1.40 to $1.50 worth of merchandise. "It's a terrific way to increase the average sale," he says.

Many consumers salivate over the day as well. Louella Graves of Cleveland is one of those shoppers. She has been known to arrive at stores at 5 a.m. to stock up on winter clothing, Christmas tree ornaments, or even next year's gifts.

"I'm looking for that big four-letter word: sale," she says. "An even better word is clearance."

Only a few time zones away, Mr. Jensen in Salt Lake City will also be planning his day. "I'm heading for the stores looking for a good deal on a small portable DVD player," he says.