California Apparel News

Retail sales for the 2005 Holiday season proved to be solid, but the good news did not arrive until after a few weeks of nail biting for shop owners.

On Jan. 5, the International Council of Shopping Centers reported that the retail sector’s sales for the crucial Holiday month of December posted a moderate increase of 3.2 percent over the previous year. Although the increase was in line with ICSC’s predictions, retailers such as Cliff Haddadin said many businesses had to be very patient in waiting on the good news.

“I went to some malls before Christmas, and it wasn’t busy. I thought, what’s happening here?” said Haddadin, who had anticipated larger Christmas crowds. “But a few days before Christmas, it was busy, busy, busy.” Haddadin is chief executive officer of Beach Bums, a 13-store chain based in Anaheim, Calif.

An emotional, roller coaster–like pattern has become increasingly familiar to retailers during the Holiday season. Anticipation of skyrocketing sales begins when bargain hunters crowd malls on Black Friday, the Friday after Thanksgiving, which is the traditional start of the shopping season. The initial burst of excitement tapers off until a week before Christmas, when malls are again packed with shoppers. Retailers remain busy the week after Christmas as gift cards are redeemed and returns made.

A typical Christmas holiday pattern emerged this year. Black Friday sales were strong, growing 5.1 percent compared to the same week in the previous year. But sales grew slowly in the following weeks. For example, Dec. 10 sales increased 3.2 percent on the week over the same time period in the previous year. Sales grew 3.9 percent over the previous years for the weeks of Dec. 17 and Dec. 24, yet they fell 2.9 percent the week of Dec. 31.

Janet LaFevre, senior marketing manager of the Glendale Galleria shopping center in Glendale, Calif., reported consistent, heavy traffic at her mall, but she also noticed a pattern over the last decade of increasingly promotion-driven Holiday shopping.

“The season kicks off great,” she said. “You always have people who want the best of the best selection right after Thanksgiving. The final week of Christmas, you still have people who are looking for great deals. Then there are the strategic shoppers, people who come after Christmas, and they find deep discounts of 50 to 80 percent.”

Aggressive promotions may be a double-edged sword for retailers. Although they attract crowds, they can also affect the bottom line. Michael Niemira, chief economist of the ICSC, blamed a decrease of 0.8 percent in retail sales on Dec. 31 on aggressive promotions. “Although the final week of December had some strong days,” he said, “heavy discounts at the end of the month decreased the week-over-week sales pace.”

The hype of the season may be hurting retailers, said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. “Maybe we need to tinker with the concept of Black Friday,” Kyser said. “The retail industry has to figure out that Black Friday is a one-off event, like the Rose Parade. It’s become a media event.”

The season’s retail sales are often followed like a horse race, Kyser said, much like the film industry’s tracking of week-to-week box-office earnings. He noted that reports of box-office stumbles might give the impression that a movie is doing poorly when the opposite may be true after receipts for all of the movie’s markets are counted.

According to Kyser, after the spike in business on Black Friday passes, news consumers hungrily seek reports of retail business. “There are the early prognostications—perhaps sales look down, analysts weigh in, and the general message to consumers is, save your money, use it wisely and get a gift card. Your money is going to go further that way.”

Retailers are often just as guilty as the press for gaining Holiday attention with Black Friday hype, according to Michael Niemira, chief economist of the ICSC. He also believes that much of the industry’s strategy of promotions might be shortsighted. According to statistics from the U.S. Commerce Dept. and ICSC, the share of general merchandise sales for the Holiday months of November and December have been consistently slipping for more than a decade.

While the share of annual general merchandise sales for November and December was 24.4 percent in 1992, it slipped to 22.5 percent in 2004, and Niemira expects it to continue to go down. “The November-December share of Holiday sales is at a record low. Consumers are spending more at discounters and there’s more Christmas discounting. If the industry is comfortable with that picture, the Holiday will be less important.”

Enthusiastic e-spending

It was nothing but good news this Holiday for e-tailers. Online shopping increased 30 percent over 2004, according to the eSpending Report, published by financial services company Goldman Sachs and online researchers Nielsen/NetRatings and Harris Interactive.

Consumers spent $30.1 billion online during the Holiday season, and growth in the category of apparel was $5.3 billion, or 42 percent, over the previous year, according to the report. Jaye Hersh, owner of Los Angeles–based Web site shopintuition.com and bricks-and-mortar store Intuition, said Holiday earnings for her Web site grew 70 percent while sales at Intuition grew 35 percent. She credited the strong online sales on consumers’ increased acceptance of shopping online. “We didn’t have the same issues with people being paranoid about shopping online this year,” Hersh said. “It’s part of their lives now.”

Intuition also started a gift-card program in late 2005. Hersh hoped the program would increase sales in January, which traditionally has been a quiet month. And so far the strategy is working. “The first week is starting off very strong,” she said.