||Holiday Shoppers Expected To Be Less 'Grinchy' This Year
There are signs the chill on holiday spending is beginning to thaw.
Consumers may not be giving gifts like it's 2006 again (before the Great Recession), but new surveys suggest some will spend a bit more and start giving presents that people want rather than simply need this year.
Think jewelry, rather than slippers and sweaters.
"It's not all about being cheap this year," says Pam Goodfellow of BIGresearch, which does consumer polling for the National Retail Federation.
The conclusions in various consumer surveys about holiday spending differ a bit, though no one's predicting a big uptick in shopping late this year. But beyond the predictions for unchanged or only slightly improved sales are other indications of a rebound. The National Retail Federation predicts holiday spending this year will be up 2.3%, but the percentage of people who said the economy would affect their spending decreased from 65.3% last year to 61.7% this year.
Several of the companies conducting surveys also see evidence that gift purchases will start to lean more toward discretionary than necessity. For example, the percentage of those who will ask for jewelry this year is up 13%, according to NRF, and the percentage who will buy at least one gift from a discounter is down.
There will be "a bit of a return to normal or the 'new normal,' " NRF spokeswoman Ellen Davis says.
There were echoes of the trend in the October sales reports out Thursday from luxury and clothing retailers, whose bottom lines have taken a beating in the past two holiday seasons. Sales results overall were mixed, with the International Council of Shopping Centers reporting just a 1.6% increase over October 2009. Unusually warm weather slowed outerwear sales and kept people out of stores including J.C. Penney and Kohl's, which saw sales decline. But Macy's had a sales increase of 2.5%, and sales were up 8.1% at high-end retailer Saks, which analysts were expecting would only see a 2% uptick.
Saks spokeswoman Julia Bentley says the retailer is on track to maintain "mid-single-digit growth" in sales from August through January 2011, despite cutting the number of promotions since last year.
Handbag and accessory maker Coach, which has started offering lower-priced options, said last week that its revenue was up 20% in the first quarter of fiscal year 2011.
Much of the growth is coming from the wealthiest consumers, says Josh Chernoff, leader of business consulting firm Bain and Co.'s North American retail practice. Households earning more than $100,000 a year make up just 21% of households but are driving almost 40% of overall consumer spending, he says. That's up from 34% of consumer spending in 2006. Retailers who cater to the affluent -- higher-end department stores, luxury retailers and warehouse club stores -- are doing the best "and we think we'll see that trend continue through the end of the year," Chernoff says.
Mark Tapper, co-owner of Tapper's jewelers in the Detroit suburbs, has seen double-digit sales growth this year and is predicting a 25% increase in sales this holiday season at the two stores the company has had for several years. Damning the economic naysayers, the Tappers opened a third location in Troy, Mich., in September. The chain has increased its selection and promotions of lower-priced items, including Pandora-brand jewelry that starts at $25 and a $1,199 engagement ring, but it's still catering to customers looking for the finest jewelry.
"Every day, people asked us if we were crazy," Tapper says of opening a new jewelry store. "But we believe in this economy."
• Global information company Nielsen says 36% of people it surveyed said they'd be spending less this year, a decrease from last year when 42% reported plans to cut back. Despite the loosened grips on wallets, Nielsen still expects sales this holiday season to be unchanged from last year. But Nielsen agrees there are bright spots for luxury retailers and others who sell more of the want-to-haves than the must-haves.
"Some of where we see softening occurring is within the discretionary categories," says James Russo, Nielsen's vice president of global insights.
Clothing, consumer electronics and jewelry sales have all shown an uptick in recent months, says Russo, whose company tracks daily online sales transactions. Online jewelry and watch sales, for example, have been increasing each month for the last three months. September 2010 sales were up 29% over September of last year. He acknowledges that a lot of this spending is being "driven by high-income households." Tapper says sales of larger diamonds and high-end watches are way up.
"Some consumers are still trading down -- we're selling more sterling silver and diamond merchandise (rather than gold and diamond) than ever in the past," Tapper says. "But people are feeling tired of being in an economic glut and are excited about gift giving again."
• Management consulting firm Accenture also predicts spending this season will be flat, due in part to the fact that 83% of those it polled said they would spend the same or less than last year. Still, Janet Hoffman, managing director of Accenture's retail practice, says the company is "seeing a rebound in luxury" and agrees with NRF that "want" buying is also making a comeback.
Mike McAvinue, general manager of The Mall at Short Hills in Short Hills, N.J., says stores are requesting far more storage space for inventory this year, especially those that sell high-end merchandise. Luxury stores at the mall say they've bought about 10% more this year over the 2009 holiday season.
Still, Hoffman says shoppers will still keep a close eye on value for the dollar.
Sharon Honeywell of Flourtown, Pa., says she won't be changing how she shops this season because, like most people, she's adjusted her lifestyle to "the new norm." She says she'll keep looking for sales and free shipping deals online.
"There will be a pretty controlled approach to the concept of holiday," Hoffman says.
• Shoppers may have a "conservative outlook" on the economy, but consulting firm Deloitte concluded it isn't hindering their holiday plans. More than six out of 10 survey respondents said they plan to spend more or the same on the holidays -- an 11 percentage-point increase from Deloitte's 2009 holiday survey and the highest level since 2006. Two-thirds of respondents said their household financial situation is the same or better than last year at this time. That's up 10 percentage points since last year. Still, Deloitte says consumers remain cautious about their spending, with nearly 75% planning to change the way they shop to save money, and almost half saying they plan to pay with cash rather than credit.
Matthew Shay, CEO of the National Retail Federation, says retailers feel like they have "a bit of breathing room" thanks to shoppers' plans to budget for impulse purchases for themselves and discretionary gifts. Still, he notes, "Retailers won't fully believe the economy has totally recovered until we start to see unemployment numbers stabilize and consumer confidence increase."
Don't expect dramatic price cuts
Brad Wilson, founder of the deal site BradsDeals.com, says this holiday season is "sort of boring by comparison" with 2008 and 2009 when the recession kept many people out of stores. By now, retailers are more cautious about ordering inventory so they don't have to slash prices as dramatically as they did in late 2008 to move what hadn't sold. Now, he says, "Retailers are relatively healthy, but we still don't have consumers who are all that healthy." So he predicts the biggest retailers will compete aggressively on price to gain market share, not "out of desperation."
This year's early Black Friday promotions lead Wilson to conclude that retailers aren't banking on people increasing their spending by much. Deals such as Wal-Mart's early promotion of Vizio HDTVs that start at $298 suggest retailers are expecting "frugal splurging," Wilson says, "not like the 2007 charges to my credit card."
Retail branding expert Ken Nisch agrees there will be "less desperate promotion," which he predicts will lead to fewer promotions overall.
Retailers now have a "lot more clarity on what's going to sell and not going to sell," thanks to product testing and merchandise planning, says Nisch, chairman of the retail design and branding company JGA.
Still, to many, it will seem like more of the same.
"The 2010 holiday shopping season will be spectacularly unspectacular for many consumers, but that will suit retailers who remember well the turbulence of Holiday '08," Hoffman says.
Kristy Tucker, a teacher in Lexington, Ky., offers both hope and more of the same for retailers. She's hoping for a piece of jewelry this Christmas that will commemorate the upcoming birth of her first child. She's always preferred one high-quality gift rather than lots of little ones that just "migrate to our storage room." But when it comes to gift giving, she says she's gotten in the habit of looking for lower-cost gifts and that won't change even though the economy has improved.
"I just can't kick this habit of looking for bargains," says Tucker, 33. "It's akin to the hunter seeking the ultimate deer."
(Source: USA Today, 11/08/10)
Click here to email to client
Back to Radio Sales Today
Click here to view classified ads in the RAB Job Center.
Time Management for Managers
Balancing the demands of a career with a personal life is difficult in any profession, but particularly so with sales managers.
Join RAB's Mark Levy for an enlightening webinar that will provide you with ideas on how to maximize your productivity on the job, while still enjoying the time you spend away from the office.
This one-hour presentation is scheduled for this Thursday, November 11, at 10 AM Central. For more information and registration details, follow this link.
Are You Getting Your Share of Digital Business?
There is a reason Radio is not getting the Digital revenue it deserves: Too many clients don't think Radio sellers understand Digital. And that means the money that could be going to Radio, to your stations, to your commission checks, is likely going somewhere else.
It doesn't have to.
RAB's Certified Digital Marketing Consultant (CDMC) training will give you and your team the confidence and ability to present and close your station's Digital business. Period.
For more information, contact Rob Boaden today at (843) 757-5066 or email@example.com.