WWD.com/fashion-news/fashion-features/retailers-are-bracing-for-short-yule-season-746727/
government-trade
government-trade

Retailers Are Bracing For Short Yule Season

NEW YORK — Short but not sweet. That’s what retailers have to look forward to this Christmas.<br><br>With the sluggish economy and six fewer shopping days between Thanksgiving and Christmas, apparel and general merchandise retailers are in...

NEW YORK — Short but not sweet. That’s what retailers have to look forward to this Christmas.

With the sluggish economy and six fewer shopping days between Thanksgiving and Christmas, apparel and general merchandise retailers are in for a tough holiday, according to speakers at the Retail Marketing Society’s annual Christmas forecast here Wednesday.

For apparel specialty retailers, the prediction is for growth of just 1 percent in the November-December period, according to Mark Friedman, first vice president and retail analyst for Merrill Lynch. This follows a 0.4 percent decline in sales in the same period last year. Comparable-store sales are expected to rise a similarly anemic 1 percent, versus the 1.8 percent decline last year.

Net earnings, he said, are expected to rise 8 percent in the fourth quarter versus 20 percent last year. Friedman attributed the lower earnings to diminished opportunities to cut overhead costs.

Friedman said retailers face challenges on several fronts, including the promotional environment, the economy, the shorter selling season and the fallout from the West Coast port lockout.

However, he did point to healthy sales of novelty items, favorable weather and a pickup in tourism as opportunities.

Daniel Barry, managing director and senior retail analyst for Merrill Lynch, provided the forecast for the general merchandisers and department stores, and the picture was far from rosy. He predicted a gain of 3.9 percent in real terms, a figure that drops to 2.3 percent when adjusted for price deflation. Department stores are expected to have negative comps.

Barry also cited the slowdown in the economy, the six fewer shopping days, lowered consumer confidence, an uptick in auto sales (which takes away from general merchandise spending), a possible war in Iraq and the dock lockout as the reasons for the weak Christmas.

He said because there was such a post-Sept. 11 sales surge last year, retailers are up against tough comparisons. In fact, Barry said he is expecting poor sales through at least the spring.

Although Michael Hand of STS Market Research was similarly downbeat, pointing to the fact that there’s too much retail space per capita and consumers have been conditioned to shop on sale, he did make one valuable suggestion: Noting that it’s cheaper for retailers to keep customers ($40) than look for new ones ($200), he said savvy stores need to get their existing shoppers in more often and coax more dollars from them.

This will boil down to having the right product to tempt those loyal customers. In women’s, Hand said, that means sweaters, shirts, jeans, accessories and coats or jackets, in that order, that will be winners this holiday season. In men’s, it’s more dressy slacks and shirts, as well as sweaters, coats or jackets, accessories and jeans.

Jamie Ross, creative director of Doneger Creative Services, provided a fashion overview for the season. Novelty items in both women’s and men’s are expected to do well as consumers seek out special and unique products. This translates into embellishments and embroidery for women’s and a trend toward layering for both genders. Decorative accessories are also expected to perform.

Another trend is toward loungewear and ath-leisure, she said, which started in young men’s and juniors, but is now moving into other age categories. Fashion denim will continue to be important, she said, as will suede and shearlings in apparel and accessories.

Key items for holiday will be luxury or sporty sweaters, the “little black dress,” quilted jackets and watches for men.