Four More Weeks of Holiday Shopping
“It’s not over until it’s over” may be the slogan for the 2006 Christmas retail season.
Retailers and mall managers reported solid, but not spectacular, consumer traffic in the crucial week preceding Christmas.
News of a “solid” business cycle caused many retail analysts to wonder how to characterize the holiday season, a time when many retailers anticipate earning one-third of their annual sales.
Yet retail analyst George Whalin said that because of gift cards, retailers still have a few weeks to go in the season even if people have already put their Christmas lights and decorations in storage.
“You have to look at the entirety of the season,” said Whalin, president of Retail Management Consultants in San Marcos, Calif. “We’re looking at 2 1/2 to three more weeks of Christmas shopping. You can’t call it yet. It’s too soon.”
A sharp spike in the purchase of gift cards lengthened the 2006 Christmas season. According to the National Retail Federation’s gift-card survey, Americans spent 34.3 percent more on gift cards in 2006 than they did in the 2005 holiday retail season. More than two-thirds of gift-card recipients will redeem their gift cards by the end of January and spend a total of $24.8 billion.
The promise of more holiday business had analysts, such as Jack Kyser, chief economist of the Los Angeles County Economic Development Corporation, forecasting that Southern California would report a 6.7 percent sales increase in seasonal sales compared to last year.
That is up slightly from the NRF’s forecast that the nationwide Christmas season this year would experience a 5 percent increase over 2005.
Yet the International Council of Shopping Centers was a tad more bearish, predicting that when the final tally is in, sales will only amount to a 2.5 percent to 3 percent sales increase over last year.
Sales were expected to be sluggish at discount retail stores, with an anticipated 0.5 percent decrease during the holiday season. For many, the desire for winter clothes fizzled when Christmas-season temperatures turned balmy across much of the United States.
To entice consumers after the holiday crunch, retailers relied on promotions and sales of various items. On Dec. 27, Kohl’s advertised a 60 percent discount on outerwear. Macys.com offered discounts of 20 percent to 65 percent on various items throughout its Web site. And Anaheim, Calif.–based activewear chain Beach Bums said it would offer January discounts of 30 percent to 50 percent off selected items.
Some specialty chains hoped to beat markdown fever by introducing Spring 2007 fashions in January.
Fred Levine, co-owner of the M. Fredric stores, based in Agoura Hills, Calif., said that manufacturers have already delivered many Spring fashions to his warehouse.
“As far as markdowns go, we roll them out gradually over the month of January to keep the bargain hunters interested,” he said. “But we depend more on fresh new looks to generate business.”
The big winners this holiday season are expected to be selected department stores and luxury retailers, according to the ICSC. However, department stores such as Macy’s and Nordstrom were not reporting holiday sales figures to the press. Instead, Nordstrom waxed long on what items sold well during the season. They included cashmere sweaters, printed knits, premium-denim skinny-leg jeans and dresses. That was on top of designer duds such as a Donna Karan black long-sleeve sweater that retailed for $850.
The 2006 holiday season was also deemed to be a year when more consumers took to the Internet to let their fingers do the shopping. Boston-based Jupiter Research forecast that more than 114 million people across the United States would purchase more than $32 billion in gifts online during this holiday season. That’s a 6 percent increase over the previous year.
E-commerce competition was unprecedented in 2006, said Tanya Zilinskas, owner of a San Francisco–based ecommerce boutique at www.maneaterthreads.com.
She noticed that Internet merchants were offering 10 percent to 30 percent discounts throughout much of 2006. “These are people not used to offering discounts,” Zilinskas said. “They were feeling competition more keenly this year.”
Just as the Internet reported a fine holiday season, so did specialty stores. Levine, of M. Fredric, saw solid sales that increased 14 percent over last year. He said a surprise growth category was in premium kids’ clothing, which grew 16 percent this season.
Jeannie Lee, owner of the Satine boutique in Los Angeles, said that Christmas can often pose a threat to high-end boutiques because many of their customers travel during the holidays. However, Lee found that her business got a boost from an uptick in tourist traffic.
