A holiday miracle could be in the offing for apparel marketers, according to a new forecast by Brand Keys.
This story first appeared in the November 12, 2009 issue of WWD. Subscribe Today.
Despite predictions of lackluster holiday business, 16,000 consumers responding late last month to the branding consultant’s annual survey expect to spend an average of 10 percent more for apparel than they did a year ago — a surprising leap, considering a projected 1 percent drop in outlays overall.
After two years on the sidelines, these shoppers appear ready to add some new clothing to their wardrobes, including pieces to replace things that have worn out or no longer fit, said Robert Passikoff, president of Brand Keys. The holidays also may unleash seasonal demand for apparel, traditionally the number-one holiday gift, albeit one overshadowed in recent years by demand for gift cards and electronics.
In considering their November and December spending plans, consumers eyed “mostly things that have been heavily discounted this fall, like apparel and electronics,” Passikoff said. “They started discounting clothing early, and it’s going to continue.”
E-mail promotions on Tuesday, for example, included Saks Fifth Avenue’s offer of 40 percent off women’s apparel and 25 percent off men’s apparel; 20 percent off fashion purchases at bloomingdales.com, and an extra 15 percent off goods already discounted by 30 to 60 percent storewide, for Macy’s Veterans Day sale, by using an in-store coupon posted at macys.com. On Wednesday, J. Crew introduced its holiday sale on its Web site with the invitation, “This year, wrap it up early,” and a promise of “up to 40 percent off” online and in stores.
Sizable promotions early in the season are intensifying an already competitive fight for sluggish spending. “Given no real increase in spending, retailers will again compete for fewer consumer dollars,” Passikoff said.
Among the 16,000 adults polled by Brand Keys, one-third said they would spend less than in 2008, 62 percent expected to spend the same and 6 percent indicated they’d spend more. On average, shoppers estimated they would expend $783 per household.
“To spend extravagantly makes you look out of fashion,” said John Gerzema, chief insights officer at Young & Rubicam. “People are wearing [their restraint] almost as a badge of honor. It’s got an emotional element.”
With more of the public eating more meals at home and entertaining at home more often, Gerzema said products such as video games, flat-screen TVs, home theater components and other electronics are likely to “do well” this season. Electronics and entertainment media rated as the third and fourth most popular gifts to give in the Brand Keys survey; gift cards topped the list.
The growing number of people planning to shop online — 95 percent — made the Internet the number-one destination for anticipated holiday purchasing, followed by discount stores, noted by 93 percent, and catalogues, 75 percent. Department stores ranked as the fourth favorite, cited by 72 percent of the season’s shoppers. Specialty stores were fifth, mentioned by just 25 percent.
“There’s a recession fatigue,” Gerzema said. “Consumers will be cautious this holiday season, but they are tired of whining, worrying and two years of bad news.”
Concerns about holiday, however, lingered on Wall Street Wednesday. Despite a narrower third-quarter loss, Macy’s Inc. issued a fourth-quarter forecast below analysts’ expectations, sending its shares down $1.57, or 8.1 percent, to $17.86, and spurring selling of retailers’ stocks. The S&P Retail Index fell 1.31 points, or 0.3 percent, to 403.86 even as the Dow Jones Industrial Average and the S&P 500 managed to add 0.4 percent and 0.5 percent, respectively, to 10,291.26 and 1,098.51. Macy’s percentage decline was the largest of major retailers tracked by WWD.