Seasonal shopping forecast looks a little skimpy - East Valley Tribune: Business

Seasonal shopping forecast looks a little skimpy

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Posted: Saturday, November 8, 2008 6:17 pm | Updated: 10:35 pm, Fri Oct 7, 2011.

Scottsdalebased Cactus Flowers is holding "tinsel training" classes, teaching people how to decorate their homes for the holidays and offering class participants a double-digit discount on any decor they purchase.

Wal-Mart just announced plans to launch specials on thousands of items every week for the next seven weeks to help stretch holiday budgets.

Consumers polled by the National Retail Federation said they will spend an average $832.36 to celebrate Christmas, Hanukkah and Kwanzaa, a pittance more than they spent last year.

Challenging economic times have impacted the plans of shops and shoppers as the traditional holiday spending season kicks into gear.

Look for early season promotions, deep discounts and even going-out-of-business clearance sales - good news for those who have limited funds for buying gifts and goodies during the usually festive holidays.

While shopping centers around the Valley hung festive garlands and conjured up ideas for promotions and gimmicks to attract holiday shoppers, retailers reported dismal sales for October, an omen for what is shaping up to be a gloomy holiday for the retail industry.

The International Council of Shopping Centers, which monthly tracks dozens of U.S. retail chains from luxury specialty stores to discounters, reported overall performance last month as the worst since October 1969.

The shopping center group's chief economist, Michael Niemira, described October as "simply awful."

Sales at Nordstrom plunged 15.5 percent compared with October 2007, Abercrombie & Fitch sales slipped 14 percent.

Discounters and wholesalers like Ross Stores, up 4 percent, Wal-Mart, up 5.3 percent, and Sam's Club, up 4.5 percent, seemed to better weather the spending stagnation prompted by the economic downturn.

But overall October results set the pace and confirmed experts' predictions for holiday spending.

SHOPPING FOR SAVINGS

Niemira is forecasting a 1 percent increase for combined November-December sales, the outlook boosted to a positive number by the discounters.

"Discounters and wholesalers will have a relatively good season as consumers focus on basics and value," he said. Other retailers won't fare so well.

"This year's holiday-season spending will be more modest compared with recent years as the U.S. financial and economic crisis weighs on consumers' willingness and ability to spend," he said.

The National Retail Federation is predicting a slightly more optimistic 2.2 percent increase in overall spending, said Ellen Davis, spokeswoman for that organization. A recent consumer survey commissioned by the Retail Federation came up with a middle-ground guess of a 1.9 percent increase.

Davis said the retail group upped its estimate a bit because consumers typically spend a little more than they budget. Still, 2.2 percent would be the smallest year-over-year increase since 2002, she said. The average holiday season sales growth is 4.5 percent, Davis said.

Even if it's not a perfect predictor of total spending, the consumer survey is a good gauge of where people plan to spend their money and on what, she said.

About 70 percent of the consumers who responded said they would do at least some of their shopping at discount stores. It was the biggest shopping destination category.

A survey commissioned by Wal-Mart found consumers are not only looking for less expensive holiday purchases, but they are also shopping early for deals, said Tiffany Moffatt, Wal-Mart regional spokeswoman. That prompted the company's seven-week promotional program, she said.

"Americans are nervous about the economy," Moffatt said. "They are planning to stretch their dollars more than ever."

SURFING FOR SAVINGS

More than 44 percent of shoppers surveyed by the Retail Federation said they will save gas money by doing some of their holiday shopping online.

That's about the same number of consumers who shopped via the Internet last year. But survey respondents who shop online said this year they expect to make more of their purchases via the Web or at least spend more effort researching items and prices online before heading tostores.

The Internet will influence 33.6 percent of holiday purchases, up from 30.2 percent last year and 28.9 percent in 2006, the Retail Federation reported.

Web retailers, like their brick-and-mortar counterparts, will be offering deals to snag the business.

"Online retailers are resilient, but not immune, to the challenges of this holiday season," said Scott Silverman, executive director of Shop.org, the online division of the National Retail Federation. "Retailers will be heavily promotional to attract shoppers on a budget, but they have also invested in new site features to improve the online buying experience."

Financial consulting giant Deloitte also polled consumers about their plans for holiday shopping, and 73 percent of them said the biggest consideration about where to shop was where they would find "the best value for the money."

Click for full version of spending breakdown
CAPTION

Convenient location, quality and selection of merchandise, and customer service or sales associate experience all ranked lower on shoppers' priority lists, according to Deloitte's survey findings.

"Almost seven in 10 consumers (68 percent) plan to change the way they shop due to economic concerns," the company reported. "Their strategies will include buying more products on sale (81 percent), buying more lower-priced items (63 percent), limiting or consolidating shopping trips to save on gas (58 percent), and using more store coupons (57 percent)."

FIRE SALES

"While low inventory levels may enable retailers to avoid 'fire sales,' consumers are looking for deals and value," said Stacy Janiak of Deloitte. "Retailers will likely not be penalized for their leaner staffing levels since consumers are focused on value rather than on other factors, such as customer service. As we saw in the back-to-school season, price-oriented retailers have an edge in this environment, as well as an opportunity to enhance their market share and positioning. At the same time, retailers will be focused on demonstrating the value they bring to their customers beyond price, such as expanded private label lines and enhanced loyalty program awards."

Retailers are listening and adjusting to consumers concerns, so shoppers will find good deals early in the season, Davis said. But inventory levels are a concern, she said, and popular items may go fast as shops cut back orders to avoid ending the season with shelves full of unsold merchandise.

"Retailers are shipping less inventory than in 2006 or 2007," Davis said. "If you have something in mind, you should buy it within the next few weeks."

For most retailers, the holiday season accounts for 20 percent to 40 percent of annual sales, Davis said, so shopkeepers are as anxious about the upcoming holidays as are cash-strapped consumers.

"Christmas is very important to us," said Kristina Dyrr, vice president of Cactus Flowers.

The family-owned stores sell wreaths, trees, decor and flowers for the holidays, and, in December, deliver corporate gifts, she said. Dyrr said consumers are clearly starting holiday planning early as evidenced by good response to her tinsel-training classes.

"It's only early November and people are already thinking about Christmas, and that's a good sign," Dyrr said. "We're all concerned about the economy, but we're hopeful and trying to be smart in what we buy and where we place our advertising."

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