Retailers' Graveyard Shift Wins Over Shoppers, Analysts

While most of New York was fast asleep at 3 am on Thursday, 25-year old Tatiana Baret from the Bronx went to Macy's.

"It is convenient, it's actually a little more quiet at this time. It tends to be very hectic and busy during the early hours up until late at night," said Baret, who was shopping with her mother at Macy's flagship store in Herald Square.

Both Baret and her mother work pretty late themselves, making shopping during the day almost impossible.

Keeping last minute shoppers such as Baret in mind, a handful of major U.S. store chains are staying open round the clock this week, a decision hailed by shoppers and industry watchers alike.

Toys R Us Inc and Macy's Inc are among the few that have decided to keep many stores open through the night, as they make a final push to ring up sales in the last days before Christmas.

Overnight store checks and interviews with employees by Reuters showed few shoppers visit stores after midnight.

In the period between 2:30 am to 4 am, Reuters found about two dozen shoppers at Toys R Us' key store in Times Square, less than 15 people at Best Buy Co Inc's flagship store in Union Square and more people at Macy's in Herald Square, all in Manhattan.

Still, many retail consultants and investors said the move was worth it.

"If nothing else, staying open all night gets retailers media attention," Trutina Financial Chief Investment Officer Patty Edwards said.

Also, asking employees to work a graveyard shift was not a bad idea even if fewer shoppers visit after midnight, many said.

"As long as the labor in the stores overnight is being used to stock shelves and such, it's not such a bad idea," Edwards said.

The holiday shopping season that traditionally kicks off on the day after Thanksgiving is closely watched by investors as consumer spending accounts for about 70 percent of the U.S. economy and many chains are pulling out all the stops as they enter the final lap of holiday shopping.

For the sixth year, Macy's has instituted pre-Christmas round-the-clock shopping at 14 of its 810 or so namesake stores, including its Manhattan flagship. It also extended hours until 2 a.m. at 18 more stores to give shoppers more convenience.

The department store's first ever midnight opening on Black Friday was a hit with shoppers, allowing the retailer to win shoppers from rivals such as Kohl's Corp and J.C. Penney Co Inc.

Across the board, shoppers cited convenience and less chaos as factors behind their decision to shop so late. Many have jobs that make it difficult for them to shop during the day. Some shoppers called themselves regular procrastinators or gave other reasons for their last-minute shopping.

"We had to wait for the money. We didn't have any money. So we are shopping at the last minute," said Jason Carrasquillo, 31, who was shopping with his wife at Toys R Us at 3:30 am.

Employees in the store also were in favor of the decision because it gave them a chance to earn more. Some employees also said it was less hectic after midnight, making the work shift quite appealing.

"I find it easy to work at this time. When it's rush hour, it is hard to work. Earlier today, when I came in at 10 pm, it was packed here ... I couldn't even focus because people were all in my way," Jasmine Finney, 22, a full-time employee at Macy's and a Brooklyn resident, told Reuters.

Another Macy's employee, 19-year old Julian Florimon, said over 15,000 shoppers visited Macy's on Wednesday.

Longer store hours are also expected to draw customers who otherwise shop online. Despite extended shipping deadlines, most retailers take their last online orders by early Thursday to make sure goods are shipped in time for Christmas.

"What happens in this last week is that folks used to the 24/7 of the internet all of a sudden don't have that outlet any longer," said John Long, a retail strategist at consulting firm, Kurt Salmon. "As we get into Friday and even tonight, you will begin to see more traffic (in stores).

"The incremental expense of keeping the stores open pale in comparison to the benefits."

While most industry watchers backed the move, some were skeptical.

"I do not think those retailers who have chosen to stay open all through the night will be entirely successful in driving incremental traffic into the stores unless they offer Black Friday-like door busters in off hours," said Michael Koskuba, senior portfolio manager, Victory Capital Management.

If they do run such promotions, then they run the risk of generating lower margins.

"With traffic down already during off hours and due to the necessity of staffing the stores, they are already cutting into margins," Koskuba said. "Perhaps the retailers will generate some incremental traffic, but the risk of lower margins is quite prevalent."

(Reporting by Dhanya Skariachan; Additional reporting by Phil Wahba; editing by Andre Grenon)