Stores plan for ho-ho-hum holidays -- and a semi-happy new year

Another day, and another group of retail experts has forecast that this year's holiday shopping will get a C grade -- a so-so showing with extra points for effort. And that could be a taste of what shopping will be like in 2010.

Things are looking a little better than they did even a week ago, but overall the store displays will look lackluster this year, said the experts. Thanks to new technologies, retailers have become much better at managing inventory to get it just right and there are no must-haves this holiday season, so don't expect hand-to-hand combat for the last item on the shelf."There's plenty of nothing that you want to go around this year for holiday," said Marshal Cohen, chief industry analyst of market research firm NPD Group. But that's an opportunity for retailers to steer customers from one brand to another or one item to another, he said.

Shoppers are getting pulled in two directions, he said: On one hand, they are cutting back their gift lists, but they are spending as much or even a little bit more on those people still left on the gift list. And while they are experiencing "frugal fatigue," this year's gifts will lean towards the practical and classic, said Cohen. His research shows that books, music, movies and apparel will be popular this year.

Store traffic is growing stronger as the fall progresses, said Richard Hastings, consumer strategist at Global Hunter Securities. He estimated traffic at apparel and accessory stores was up 4.7 percent for the week ending Oct. 17 over the previous week, which was 2.8 percent above the week before.

Those numbers jibe with the weekly data just released by the International Council of Shopping Centers. It found sales for the week ending Oct. 25 were up 2.4 percent from the same time last year. Chief Economist Michael Niemira said he expects the full month's same-store sales to be flat over last year's results "with a bias towards a somewhat higher outcome."

Hastings is projecting holiday sales will come in about 2.5 percent higher than 2008, but those figures were 7.5 percent lower than 2007, so this holiday will still be nearly 5 percent less lucrative than two years ago.

Consumers are starting to adapt to the recessionary environment and are not as panic stricken as they were last year, Hastings said. He noted that second-tier national chains such as Pier 1 Imports Inc. (PIR), Bon-Ton Stores Inc. (BONT) and Tuesday Morning Corp. (TUES) are reporting stronger traffic and sales.

"When you start to see rising indicators from the smaller boats in the industry, it means the waves are getting bigger," he said.

So this holiday could provide a preview of what retail will look like in 2010, with shoppers watching their money and stores watching their inventory. Hastings noted that inflation may become a factor in late 2010, as taxes "creep up" but also some stimulus spending should make its way into consumers' pockets during the year.

There has been a slight uptick in inventory coming in, noted Ellen Davis, VP of the National Retail Federation. The group had noted that inventory arriving in U.S. ports is down to 2003's level going into the holidays, but this week, the NRF's latest survey of cargo in U.S. ports puts the import arrivals at 2004's levels.

"It's perhaps an indication that retailers see there's an end in sight," Davis said. But she warned about getting too giddy over any strong first-quarter results next year: the first quarter of 2009 was so weak, it won't be hard to show an improvement in 2010.

Cohen warned retailers are more focused on making money in these conditions and less focused on adding stores and growing. "The new measure of success is about profitability," he said.

So lacking new hot products, don't expect many fireworks from stores. And shoppers will likely hold off on buying until late in the holiday season, said Cohen. Late shopping is now a year-round trend, he said.

"These last two weekends were back-to-school busy," he said. "Since when do you have back to school (shopping) in October?"

Cohen's research says 51 percent of consumers don't plan to start holiday shopping until after Thanksgiving and many will shop after the holidays, especially since gift cards remain a popular gift.

"We will have some doorbusters, but that early business will not be as strong as last year," he said.

The holiday forecasts this year are all over the place, with some analysts estimating sales will be down, some seeing flat sales and some seeing a small uptick over last year's dismal numbers. But "the narrative you're hearing by and large is the same," said Davis.

"The holiday season will be better than last year, but not as good as average," she said.

Learn about investing from the comfort of your own home.

Portfolio Basics

Take the first steps to building your portfolio.

View Course »

Investment Strategies

Learn the strategies you need to build a winning portfolio

View Course »

Add a Comment

*0 / 3000 Character Maximum