Christmas in May? It’s never to early for retailers to worry about the holiday season.
This story first appeared in the May 29, 2013 issue of WWD. Subscribe Today.
This year, there will be six fewer selling days in the period between Thanksgiving and Christmas. Some retail experts see this as a significant disadvantage, while others point out that last year’s performance, with 32 days in the period versus this year’s 26, wasn’t a stellar performance despite all the shopping opportunities.
“The more selling days you have between Thanksgiving and Christmas, the better off you are,” said Arnold Aronson, managing director of retail strategies at Kurt Salmon. “Pre-Christmas selling has always been more valuable than post-holiday selling.” Aronson said more selling could shift to the days between Christmas and New Year’s. “After Christmas, there’s more gift-card redemption, but the net-net is that it’s still better to have more shopping days before Christmas.”
Judging by J.C. Penney’s promotional activity over the Memorial Day weekend, it seems clear that the beleaguered retailer is determined to fight for every incremental sale, which means it could likely be even more promotional at Christmas. “Penney’s major selling proposition was value,” Aronson said. “They’re pushing their traditional strength, which is highly value-oriented.” Retailers such as Macy’s, Kohl’s and Stage Stores, which share markets with Penney’s, may be impacted. “The hurt will be spread around the board,” he said. “Each one of those retailers will know what Penney’s is doing, and their reactions will be geared toward making sure they don’t lose whatever they gained [from Penney’s].”
Harry Ikenson, a retail analyst and consultant at Ikenson Research & Consulting, pointed out that when there are more days, there can be a lull in December, when consumers get shopping fatigue. He said there should be less of a lull this year as the shopping period is compressed.
Walter Loeb, president of Loeb Associates, predicted that Christmas ads will be seen as early this year as the day after Labor Day, given retailers’ apprehension about this year’s holiday. “[Retailers] have to plan the whole fall season to be more promotional and more aggressive in order to achieve their goals.” Last year, total holiday retail sales increased 3.0 percent, below a projection of 4.1 percent to $579.8 billion, according to the National Retail Federation.
Craig Johnson, president of Customer Growth Partners, said the number of selling days is impacting retailers’ promotional cadence. “The big factor is the whole transformation we’ve seen on Black Friday. Now it’s Black Thanksgiving,” he said, referring to stores that opened on Thanksgiving Day. Not that stretching Black Friday was so successful. “I’m not sure it dramatically adds to the pie,” Johnson said. “It cannibalizes [sales later in the holiday season]. Last Christmas, Thanksgiving was as early as could be, and it was a very so-so Christmas. If there’s low growth in disposable income, there’s going to be low retail sales growth. We’re up 2.7 percent for the first four or five months on a year-over-year basis. We think it will slowly pick up as the year proceeds, and it may end up being a decent Christmas.”
How fewer shopping days will impact e-tailers remains to be seen. Sucharita Mulpuru-Kodali, vice president and principal analyst at Forrester Research, said, “A shorter holiday season will affect everyone. Bricks-and-mortar will be particularly hard hit, but even Web retailers could suffer a pinch. They’ll have a great Cyber Monday as they’ve been having for many years, but every day less means that they have to make up sales earlier.”
With J.C. Penney expected to go all-out with sales and discounts, competitors such as Sears, Kohl’s and Macy’s may rev up their promotional machines in response. “I don’t know that J.C. Penney will single-handedly impact anyone except maybe Sears or Kohl’s, but every year retailers are more promotional online, with promotions starting earlier and earlier. Last year, some consumers expressed concern about the over-availability of promotions. We’ll see if that forces a pullback in promotions in early November. I think what we’ll see is as many retailers pushing heavier sales in November anticipating a weak December,” Mulpuru-Kodali said, explaining that promotions starting in September and October will be billed as “holiday specials.”
In the last 35 years, there have been six holiday seasons with five or six fewer shopping days than the previous year. Each of those years experienced below-average real growth, according to Frank Badillo, chief economist at Kantar Retail. In three of those years — 1974, 1980 and 1991 — real sales growth was negative or very weak. But those three years were also recession years, he noted. “That raises the question of whether the weakness was primarily the result of the recession or fewer shopping days. Shopping days are an insignificant determinant of sales. Instead, variables such as disposable income, channel prices, gasoline prices and housing starts are the factors that shape the strength or weakness of retail spending in November and December.”