Prepping for a Merry Little Christmas
Retailers Ready with Lean Inventories, Bright Windows, Fun Events
Last year’s holiday sale season was akin to a nightmare, ending with retailers seeing a 3.4% decline in sales and a bleak outlook for the year ahead. This year, however, they have done their homework, and it appears smart preparation will define 2009’s merry season.
Last year, stores had already made their buys when the economy took a nosedive, and as a result were caught with too much inventory at prices too high for 401K-losing, job-fearing consumers. Drastic sales of up to 70% off started early and everywhere, casting a pall over the entire season. This year, inventories are concise, recession prices are in place, and planned – not emergency – sales will be a major draw for customers who want to shop without breaking the bank.
“The consumer has a limited pocketbook for this season, so the earlier you stick your hand in to get at that pocketbook, the better off you are,” says Cynthia Cohen, president of Strategic Mindshare, the Florida-based retail consulting firm.
Forty-two percent of women do not plan to spend as much on holiday gifts this year compared to last, according to the Cotton Incorporated Lifestyle Monitor™ survey. Just 24% anticipate they will spend more, although 34% of those aged 13-to-34 making less than $50,000 per year are significantly more likely than their counterparts to splurge.
“It will be a very early season, and it will be an unbelievable Black Friday morning,” Cohen says. “The sales we used to call door busters, I’m calling door explosives.”
As recently as 2007, the Monitor survey revealed just 4% of female shoppers started their Christmas shopping the day after Thanksgiving at frenzied sales resembling a running of the bulls. This year, four times as many women (16%) plan to do so, and that number leaps to 31% among females 13-to-24. Even without Black Friday sales, consumers can expect to find “value” pricing everywhere from the mass market to luxury stores. Case in point: Neiman Marcus’ 2009 Christmas Book highlights its “Little Gems” section, where gifts fall under $100. The National Retail Federation’s Scott Krugman, spokesperson, says the name of the game is bargains. “In this economy, let’s face it: all retailers are discount retailers. And they’ll lead with discounts.”
The NRF is projecting a holiday retail sales decline of 1%, to $437.6 billion, though that is certainly an improvement over 2008’s 3.4% drop. “Select product will be loss leaders, but the inventory mix is such that retailers won’t have to rely on those unplanned frantic markdowns,” Krugman says. “We won’t see 70% off across the board like last year.”
In an early bright spot, assorted retailers reported increases in September sales. Among them, discounters TJX and Ross Stores, which saw sales rise 7% and 8%, respectively. Promotionally priced teen retailer Aeropostale saw sales soar 19%. Retailers, however, cannot simply rely on a holiday game of lowball.
“Most customers are still hunkering down, and making only necessary purchases,” Krugman says. “So how do stores turn a ‘discretionary’ purchase into a ‘necessary’ one? By making an emotional connection.”
For Coldwater Creek, “It has always been a part of [our] DNA to focus on sharing cheer and goodwill with the customers,” says Georgia Shonk Simmons, president and chief merchandising officer. “As always, we will continue to focus on delivering that feeling through our window displays.”
Eye-catching window displays can grab both consumers who plan out their purchases (42%), and impulse shoppers (48%), Monitor stats show. Simmons says Coldwater Creek will also hold loyalty events throughout the holiday season; past functions have included “high teas.”
Meanwhile, stores along Main Street, USA, would do well to focus on their uniqueness. Nancy Thomas, president and CEO of the Retail Merchants Association in Richmond, VA, which kicked off its “Think.Shop.Buy.Local” campaign last summer, says her area’s independent shops will hone in on service since they cannot compete on price with the larger retailers. “Rather than lavish open houses, there may be hot cocoa, warm spiced cider and sugar cookies. The local retailers will be very service oriented – offering free gift wrap, extended hours and more than one holiday open house.”
Richmond’s merchants get a boost from the town’s annual Christmas parade, which attracts a quarter-million attendees and is televised throughout the state. Additionally, lights and fresh greens adorn storefronts and lamp posts, “progressive open houses” offer shoppers different treats and promotions, and shops stay open late on certain evenings.
Cohen says independents need to “offer coffee and drinks, and call, email and text their best customers. Offer gift wrapping and tailoring, even if you have to charge for it. Meet customers at 6 a.m., if that’s what it takes.” Meanwhile, Cohen says, major retailers will draw big traffic with celebrity events and concerts, and generate extra business with temporary pop-up stores in otherwise empty mall spaces and around major cities.
The effort is vital, as Monitor data reveal that while apparel is still the most popular gift women buy (26%, consistent with 27% in 2008), it has lost ground over time; it was 33% in 2006. Says Simmons, “It’s a chance to show what our value proposition really is, which is bringing relevant fashion in gifts, providing a great fit, and delivering the product at a compelling price point.”
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