Stores seek season’s sales

Has the Grinch stolen Christmas?

Early reports on holiday 2008 retail sales are certainly nothing to celebrate. The International Council of Shopping Centers (ICSC), which tracks 37 chain stores, said on Dec. 4 that same-store sales had dropped a record 2.7 percent year-over-year in November, citing a “recession and financial crisis still looming large in the economy.” At the same time, TNS Retail Forward, tracking 40 retailers, reported that November same-store sales were down 4.3 percent, with TNS senior economist Frank Badillo commenting, “The outlook for the final shopping days of the holiday is grim. The good news is that shoppers are not further tightening their spending plans. The sales pace should not deteriorate much more.”

These reports fly in the face of what many considered a surprisingly good Black Friday weekend. According to the National Retail Federation’s annual survey, conducted by BIGresearch, more than 172 million shoppers visited stores and Web sites over the weekend following Thanksgiving, up from 147 million last year. Further, shoppers spent an average of $372.57, up 7.2 percent compared to $347.55 in 2007—with total spending reaching an estimated $41 billion.

The NRF attributed the rise to pent-up demand for electronics and clothing, as well as unprecedented bargains on hot items. Pam Good fellow, a senior analyst at BIGresearch, credited the healthy numbers to retailers promoting items through Black Friday preview Web sites and other marketing efforts. “In past years, it was secretive, not covert like this year,” she told HCN. “I think that coaxed people out of the house.”

With the nation officially in a recession, things promise to remain tough for home channel retailers this holiday season. But not everyone’s spirits are dampened.

“Despite the challenging consumer environment, we remain optimistic about this year’s holiday selling period,” True Value spokeswoman Chris Taylor said. True Value is helping its members drive business through several holiday promotions, including Ladies’ Night, a holiday open house and a special “24-percent-off on Dec. 24” deal.

“We’re excited at the potential of the Ladies’ Night to bring in more female shoppers looking to take advantage of one-night-only sales and browse the stores,” Taylor said. “The holiday open house will offer consumers a great shopping experience, complete with fun festivities and exclusive discounts on seasonal merchandise.”

Dave Haist, chief operating officer at Do it Best, also remained optimistic. He said that “despite the fact that the economy is in a state of flux,” sales to members between the fall market in October and early December were “reasonably good.” He also noted that there are still opportunities for retailers who are focusing on high-demand items, particularly technology driven products like lithium-ion tools, weather stations and wireless thermometers.

“People are out there, and they’re shopping,” he said. “The stores that are providing them with the right products—and who are marketing them well—are having pretty good results.”

Haist also pointed to Christmas LED lights, which are energy efficient and continue to rise in popularity, as good sales drivers—especially for members who feature them in a holiday boutique or “Christmas store-with in-a-store” setting. He sees LED lights as a not her example of technology inspiring consumers to open up their pocketbooks.

“We find that members who display them well in their stores are seeing activity,” Haist said. “Putting them out there so people can touch them, feel them, drives demand.”

Lowe’s, coming off a 24 percent decline in earnings for the third quarter, has been trying to draw in customers with a new ad campaign called “Let’s Holiday.” Featuring a boy having a “magical” time at a Lowe’s store, the ads focus on the shopping experience at Lowe’s rather than a value message. The retailer has also been promoting LED lights, offering specials on multiple packages of 50 or 100, and according to some reports, holiday decor items had already been discounted by 50 percent at Lowe’s stores by early December.

Home Depot has also cut prices on holiday decor, bundling items to be able to offer consumers better savings. For example, if an inflatable snowman had previously retailed for $59.99, the deal is now three lawn ornaments for $89.99. The retailer—already the nation’s largest seller of fresh-cut trees with sales of two million-plus trees projected for this season—presents “Gift Centers” featuring 15 different combinations of tool kits. Home Depot has also doubled its selection of LED lights, which is said to be up to 90 percent more efficient than incandescents, to more than 30 skus.

“We are positioned well in holiday products, including our expanded assortment of LED lighting,” Craig Menear, Home Depot’s executive vp-merchandising, told investors during last month’s third-quarter conference call. “Our gift centers have strong values in hand tool sets and power tools across varying price points, and we’re ready to serve the storage and organization needs of our customers following holidays.”

But BIGresearch’s Goodfellow believes the brisk activity on Thanksgiving weekend will be followed by a leaner-than-usual December shopping month. She said 39.3 percent of those surveyed said they had completed their shopping for the season, compared to 36.4 percent last year. And in the home channel specifically, 20.3 percent of shoppers said they had purchased home decor or furnishings over the weekend, which was up slightly compared to 2007 (19.6 percent).

On the e-commerce front, spending on the Monday after Thanksgiving—coined Cyber Monday—jumped 15 percent, to $846 million from $733 million in 2007, according to com-Score, a company that tracks online sales. This followed a 2 percent sales drop for the period from Nov. 1 through Dec. 1, the first-ever year-over-year decline after more than a decade of double-digit increases, the company said.