Recent warm weather suggests otherwise, but the make-or-break Christmas shopping season for retailers is quickly approaching, with most forecasts calling for at least modest improvement in sales.
The National Retail Federation, the world’s largest retail trade group, forecasts a 2.3 percent in sales over last year’s meager 0.4 percent gain, based on surveys conducted by BIGresearch of Worthington, Ohio, which specializes in retail-sector analysis.
Those two gains follow the 3.9 percent plunge of 2008, when the nation’s economy was mired in deep recession. BIGresearch’s surveys pegged Christmas-related spending this year at $447.1 billion, or about $689 per person surveyed, up from $682 a year ago.
Of those surveyed, 62 percent said the economy will affect shopping.
“This is still such a psychological impact on consumers again this year,” said Pam Goodfellow, senior research analyst with BIGresearch.
The total includes gifts, the biggest category, as well as decorations, greeting cards, food and other Christmas-related spending.
The International Council of Shopping Centers, a global trade association with U.S. headquarters in New York, forecasts a 3 percent to 3.5 percent rise in Christmas sales, the largest increase since 2006.
Deloitte LLP expects a 2 percent increase. Its figures cover November through January sales and a broader definition of retail, for a total of $852 billion. The figure does not include vehicle and fuel sales.
Britt Beemer, founder and chief executive officer of America’s Research Group in Charleston, S.C., is among the skeptics going into the Christmas shopping season. He’s yet to make an official forecast - that will come after the midterm election, which he said could change some people’s attitudes.
For now, he said, he sees pessimism among U.S. shoppers “off the charts.”
“Certainly, at this point in time, there’s a lot of people out there who are going to be looking for deals and not much else,” he said. “I think we’ll have the biggest Black Friday ever. You’ll see them hit the stores for the early bird special, then they won’t be back, many of them, until the week before Christmas.”
Black Friday is the day after Thanksgiving, when retailers traditionally promote special deals to jump-start the Christmas shopping season. Some Black Friday ads already have surfaced on the Internet.
Beemer said people are hearing daily about continued high unemployment, foreclosures on homes and other bleak economic news.
“All these factors play a role in their perception that it’s not going to get better anytime soon,” he said.
His company’s forecast is based on 1,000 telephone interviews conducted in early September.
‘VERY PROMOTIONAL’
The NPD Group Inc. of Port Washington, N.Y., in its annual survey of Christmas shopping intentions, found that shoppers intend to spend about the same amount this year as they did a year ago.
“The consumer is going to be very slow in getting started,” said Marshal Cohen, the group’s chief industry analyst.He said growth will be “minimal at best.”
Cohen said shoppers are practicing “calculated consumption” rather than the impulse buying that traditionally has accompanied Christmas shopping trips. That’s not good news for retailers, he said, because “impulse purchasing is very much the biggest part of driving growth.”
Nevertheless, some positive signs surfaced in the Retail Federation’s research. Jewelry and beauty items were among the things survey respondents said they wanted for Christmas this year after a 2009 season when basics such as cold-weather clothes prevailed, Ellen Davis, the group’s vice president, said in a conference call with reporters.
“We still expect companies to be very promotional,” she said. “But it’s not easy to make money when you’re selling $10 Crock-Pots.”
Wal-Mart Stores Inc. of Bentonville is among the retailers seeking an early start to Christmas shopping. On Oct. 12, it announced “preholiday” savings on popular toys priced at $5, $10 and $15, including FurReal GoGo Pup, Nerf N-Strike, Barbie, Thomas the Train and Iron Man.
Wal-Mart is seeking to reverse a string of five consecutive quarters with sales declines at stores open at least a year. Addressing retail analysts earlier this month at a conference the company hosts each year in Northwest Arkansas, Bill Simon, president and CEO for U.S. operations, said the company is prepared for the Christmas season.
“Know that the holiday season will have a strong, a very, very strong, price focus. We’re ready for that, we’re prepared for it and we’re going to deliver against this,” he said.
“Customers are on a tight budget, their priorities are going to be for kids, and we expect that retailers will be focused more on needs instead of wants. We’re ready to deliver, especially for our core customers,” he added.
Simon said the company also will have restored some products previously removed from store shelves that the company has said resulted in lost shopping trips.
Rival discounter Target Corp. of Minneapolis is heavily promoting its 5 percent discounts from posted prices for shoppers using the company’s credit or debit REDcards.
VALUE MESSAGE
Research firm Symphony IRI Group of Chicago says its shopper surveys show that retailers will need to have a strong value message to be successful this year. That doesn’t mean shoppers are depressed about Christmas, said Susan Viamari, editor of the company’s monthly Times & Trends report.
“In fact, the consumers are still looking to make the holidays a special time,” but on a budget, she said.
“Retailers that are looking to woo consumers this season will be very cognizant, out there early and often, touting the value proposition,” she said.
The company’s research found that 59 percent of shoppers plan to spend less than $500 on gifts this year and 28 percent will draw the line at $200, up 8 percentage points from 2009. In addition, 25 percent intend to cut back on food and beverages.
Two-thirds of those surveyed said they intend to give gift cards, and half said they also would like to receive gift cards.
Challenger, Gray & Christmas Inc., a Chicago outplacement consulting firm, said last month that it expects retailers to hire more than the 501,400 seasonal workers it hired for the Christmas season last year. However, the number likely will be far short of the 700,000-plus hired in 2006 and 2007.
In 2008, retailers hired 324,900 seasonal workers, a 22-year low, the company said.
Business, Pages 77 on 10/24/2010