By  on November 24, 2004

NEW YORK — It’s just two days before Black Friday, and retailers can smell the crowds coming — 130 million shoppers are expected to hit the stores this weekend, according to the National Retail Federation.

Predicting how readily people spend is another matter.

“Retailers have their fingers crossed. I don’t think it’s anything more exotic than that,” observed Tracy Mullen, president and chief executive of NRF. “It’s been a very unpredictable year, but retailers are more on the optimistic side than the pessimistic side. It will be a solid holiday — not a spectacular one.’’

While the holiday mood among retailers isn’t bad, with many looking for around a 2 percent comp-store gain and maybe a couple of points higher on a total-sales basis, it’s not particularly bullish. Spirits have been lifted somewhat during the last few weeks due to some improved selling after a slow start to fall.

“Personally, it’s hard for me to tell what will happen, with two days extra this year,” said one department store ceo, who predicted 1 to 3 percent comp gains for the sector.

Asked about the volume for Black Friday weekend, the ceo sees it being “as big as it’s been, but it’s not growing.”

Retailers are hoping that the extra two days between Thanksgiving and Christmas this year compared with last will add some volume, and that good inventory planning and controls will lead to better margins. There’s a consensus that the price promoting won’t be as frenzied as years past and that markdowns are under control and on par with last year, when they cited markdown reductions. Online shopping will continue to be on the rise, but not of the magnitude of the past few years. The key drivers for sales are luxury, “affordable luxury” for more moderate stores, color, fur, dress-up looks, cashmere, better handbags, diamonds, intensified door-buster offers and products that retailers can boast as exclusive.

The NRF is forecasting a 4.5 percent total store sales increase for the holiday period compared with 5.1 percent last year. NRF based its sales and crowd predictions on a survey of about 7,500 households conducted by BigResearch. Consumer and economic forecast organization, The Conference Board, also predicted a 4.5 percent total gain.“Black Friday is a big day for us, but not in the same way that it is to promotional department stores,” said Michael Gould, chairman and ceo of Bloomingdale’s, which, for the past couple of years, has been taking a less promotional posture. He added that Black Friday no longer ranks among Bloomingdale’s top 10 volume days, and that he was “cautiously optimistic” about the weekend. “It’s been a strong month so far. People are spending on better goods. We’re encouraged. The ready-to-wear business so far is double digits. Fashion accessories are very strong. Men’s is good. Cosmetics is up — it’s OK — and the fur business has come back. Some things are soft,” he added, citing dresses and intimate apparel, while kids’ is flat.

“November is shaping up to be a little better than it’s been so far this season,” said Claudio Del Vecchio, chairman and ceo of Retail Brand Alliance, which operates Brooks Brothers, Casual Corner, Adrienne Vittadini and Carolee. “We certainly expect a moderate increase over last year.”

Del Vecchio also said that after-Christmas shopping continues to get bigger and bigger. “Last year, we had a tremendous weekend two days after Christmas, but this year, Christmas falls on a Saturday, rather than Thursday last year. We’re not sure we are really going to replicate that.”

Marcy Syms, ceo of the 39-unit Syms off-price chain, said the company is planning for a 3 to 5 percent comp-store gain, but she acknowledged that it’s off a soft season last year, and some stores have been closed in the past two years to lift the company’s productivity. She believes that the increased rates on consumer credit cards are an issue this year, though Mullin said there’s been an increase in the use of debit cards and doesn’t see debt as a major hindrance to purchasing.

U.S. households are expected to spend an average of $476 on gifts during the holiday season, up from last year’s estimate of $455, according to a survey of 5,000 households by The Conference Board.

Black Friday, of course, is the kick-off for holiday shopping for many Americans. A survey of more than 6,200 consumers nationwide conducted for The Macerich Company by August Partners, shows that 28 percent of consumers plan to start holiday shopping on the day after Thanksgiving.Early birds, however, represent a bigger segment, with 41 percent starting their holiday shopping between Halloween and Thanksgiving, according to Macerich, the Santa Monica, Calif.-based real estate investment trust. The remainder sit it out until closer to Christmas.

Women will make up the majority (63 percent) of serious Black Friday shoppers. Men are more prone to the last-minute rush, and represent 61 percent of those who start to shop on Christmas Eve.

“Consumers appear to have more holiday cheer heading into Thanksgiving this year than last year,” Lynn Franco, director of The Conference Board’s Consumer Research Center, said in a statement. “This upbeat attitude should translate into a more favorable holiday season for retailers.”

The Board reported that households in New Jersey, New York, and Pennsylvania intend to spend $550 on gifts, more than any other part of the country. Shoppers in Washington, Oregon, California, Alaska and Hawaii will spend the least, $400. About 33 percent of all households will spend $500 or more on holiday gifts, 37 percent will spend $200 to $500 and 30 percent will spend less than $200.

About 29 percent of all consumers will buy holiday gifts on the Internet, up from 28 percent a year ago. Books top the list of online holiday buying, with nearly 41 percent saying they will buy books as gifts. Clothing and shoes rank next as online holiday buying choices, followed closely by toys and CDs.

“Overall, we are going to have a good, solid Christmas,” said Mark Montagna, senior analyst at Wells Fargo, who covers the specialty store sector. “Inventories are tighter. That reduces the upside potential, but if they hit their earnings target then everybody is happy. Specialty retailers are getting away from being as promotional as they used to be. They have not been promoting the hell out of the place, like they used to.”

He also said that the trend to using gift cards will further increase margins. “With gift cards, consumers tend to make higher-margin purchases. They say to themselves, ‘Hey, it’s a gift,’ and don’t mind buying it full price as much as if it wasn’t from a gift card. In addition, the trend is motivating retailers to display more spring and transitional merchandise before Christmas.Among the specialty chains Montagna expects to fare well this Christmas are J. Jill, which he said has updated fits on half of the misses’ product, with all the merchandise expected to update by spring. “It’s clear the customer likes the merchandise,” Montagna said, noting that the chain posted a 21 percent gain in the first half.

He also expects Coldwater Creek to have a “bang-up year” due to lots of store growth and expanding operating margins. The company has about 135 stores operating.

“Gap will have a solid Christmas,” Montagna predicted. “I like Gap’s long-term strategy. It’s data-driven. Gap picks itsmerchandise based on what the data tell them the customer wants.” He also cited Gap’s “organic growth” by adding petites and large sizes to more and more of the corporation’s stores. He said plus sizes as well as maternity clothes are filtering into Old Navy units, while petites are filtering into Banana Republic units.

He also believes TJX Cos. should have a good season, boosted by the expansion of footwear in Marshall’s, and the expansion of jewelry and accessories at T.J. Maxx.

On the luxury scene, “we are certainly seeing people gravitate towards unique product. Anything basic, they’re not gravitating to,” said Robert Burke, vice president and senior fashion director, Bergdorf Goodman. Burke cited fur; silk scarves, particularly from Hermès and Pucci; jewelry, especially items with color and stones; metallic looks; flats, and customized products for the home as currently strong trends that should continue through the season.

“Affordable luxury is very hot,” said Carolyn Covey Morris, vice president and director of public relations for J.C. Penney, citing 400-thread-count sheets, cashmere sweaters for men and women, fur trim, classic and more tailored and fitted styles as important for the holiday. “Hiving” — entertaining guests at home — is a trend encouraging sales of “jewelry for the dinner table” translating to expected strong sales with colored glassware, beaded placements and napkin rings.

She also said Penney’s is offering better values with door-busters, including Worthington and Sag Harbor women’s suits for $99, versus $160 to $200 normally, and women’s tall boots for $29.99, compared with $80 to $100. Doors at Penney’s are opening at 5:30 a.m., versus 6 a.m. last year.

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