Christmas in July II
Nov 1, 2008 12:00 PM, By Elaine Misonzhnik
It's 60 degrees outside, the leaves haven't begun to change color and most of us haven't had a chance to put away summer clothes, but that hasn't stopped retailers from kicking the holiday shopping season into gear. Last year, retailers started to get into the Christmas spirit in October. This year the deluge began even earlier. By mid-September, for example, specialty apparel seller Urban Outfitters had a full array of synthetic Christmas trees, ornaments and stocking stuffers on display at its stores.
Meanwhile, on Oct. 2, Wal-Mart Stores Inc. announced that it would put the 10 most popular toys sold at its stores on sale for $10 apiece and open Christmas venues selling tree ornaments and other holiday paraphernalia at discount prices. Even luxury retailers joined the fray. On Oct. 7, Neiman Marcus released its annual Christmas Book of gifts and at least one Bloomingdale's, in White Plains, N.Y., is already previewing its Christmas merchandise, according to Craig Johnson, president of Customer Growth Partners, LLC, a New Canaan, Conn.-based research firm.
But is expanding the season working? Last year, an early start helped sales only marginally, according to analysts. From October through January 2007, same-store sales growth at U.S. chain stores averaged 1.58 percent, according to ICSC figures, compared to growth of approximately 3.13 percent during the same period in 2006. So the longer season didn't end up boosting sales. Instead, what seems to be driving the trend is that retailers feel like they might not have much of a choice. With consumers stretched, competition for discretionary spending is at a fever pitch and retailers are looking for any edge they can get, especially in light of the ongoing financial crisis and fears of a prolonged recession, says John Bemis, executive vice president and director of leasing with Jones Lang LaSalle Retail, an Atlanta-based third-party property manager.
In the spring of 2007, before the full extent of the economic storm had become clear, many chains ordered too much merchandise for last year's holiday season. That forced retailers to start sales early to unload as many items as possible. This year, chains have been more conservative with sales estimates, but fear the economy will leave consumers with little to spend during the holiday season. And once a major chain like Wal-Mart starts holiday discounts, everybody else is forced to follow suit, according to Carl Steidtmann, chief economist and director of consumer business research with Deloitte. Steidtmann expects same-store sales growth of 2.5 percent to 3.0 percent for the 2008 holiday season. Other analysts have said they expect same-store sales could actually decrease this year. The most recent sales figures show slowing gains. In September, same-store sales for U.S. stores registered growth of 1.0 percent, down from 1.7 percent last year. Apparel stores were down 7.6 percent, department stores 9.8 percent, luxury stores 10.9 percent. Wal-Mart, however, posted a gain of 2.8 percent. That, in fact, helped prop up the entire industry's figure.
What's more, on Oct. 7, MasterCard Spending Pulse, an index that measures national retail sales based on sales activity in the MasterCard payments network, reported a decline of 7.7 percent compared to September of last year, indicating the biggest drop in the use of credit by consumers since the index was launched in 2003.
“Retailers are looking to entice shoppers early because there is fear that if the economic slowdown continues or increases pace between now and the beginning of December, people will pull the reins in tighter than they already have,” says Bemis.
Unlike many of its tenants, however, Jones Lang LaSalle won't be starting holiday events at its centers early to prevent the risk of shopper fatigue. “If Santa shows up and that puts a dent in your kid's [allowance for] Halloween candy, that signals the season is starting too early,” Bemis says.
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