Who needs Halloween?
That seems to be the attitude of the nation’s retailers, as they zoomed right over the costume-and-candy spectacle and looked instead eight weeks ahead to…Christmas.
Weeks before the last pumpkin-carving kit was snatched off the shelf in desperation, retailers had pretty much cleared out Halloween merchandise to make way for tinsel, wrapping paper, cards and twinkling lights. They also began unveiling their holiday promotions in what seems to be the industry’s new mantra: The early bird gets the consumer’s cash.
Wal-Mart Stores Inc. and Target Corp. proclaimed Sunday as the start of the holiday season, with the former promising more rollbacks than ever with a longer duration of 90 days, and the latter offering free shipping for online and mobile orders placed between Nov. 1 and Dec. 25. Amazon on Monday said it’s pulling out the stops for the holidays and launched a Black Friday Deals store. The online retail giant also introduced a holiday electronics guide and said prime members will have access to 30,000 lightning deals 30 minutes early.
Projections for holiday 2o15 range from bullish to cautious — the National Retail Federation projects only 3.7 percent growth, down from 4.1 percent last year. Almost all forecasts say Christmas will be more digitally driven than ever, with consumers either shopping via mobile or researching on their mobile devices before buying in store. Macro Savvy forecast online sales to account for 12.5 percent of holiday retail sales this year, up more than one percentage point. Online sales are expected to increase 14.5 percent versus last year’s 13.8 percent.
The key question for retailers is whether all the early frenzied promoting will actually cause consumers to open their wallets wider — or simply spend what they’ve budgeted early and sit out the rest of the shopping season sipping eggnog.
Experts think the latter is more likely.
“What we’ve seen over the last few years with different promotions is that demand gets pulled forward,” said Craig R. Johnson, president of Customer Growth Partners. “It got pulled from December to late November and now early November. Pulling demand forward doesn’t change the [level] of demand.”
At best, retailers can hope to get some incremental share of demand by capturing early demand, Johnson said. Costco has been successful with this strategy, selling women’s swimwear in February and March and winter coats in August.
“Retailers like Wal-Mart and Target are doing price matching,” Johnson said. “It’s a race to the bottom. If somebody’s prices are lower, then other people will match them.”
What all this means is that the traditional kickoff for the holiday shopping season — Black Friday — is long gone.
“Black Friday is almost passé,” Johnson said. “The whole thing has been destroyed. For a lot of retailers, Black Friday is not even in the top-three highest-volume days of the year, because sales have been pulled to Thanksgiving or earlier in November or stretched out and diluted over the whole Black Friday week. Black Friday has gotten hollowed out.”
Johnson predicted that the biggest shopping day this season will be Dec. 19, the last Saturday before Christmas.
“The share of sales in November and December versus total-year sales is significantly less than it was several years ago,” said Frank Badillo, director of research at Macro Savvy. “The importance of specific days such as Black Friday are eroding as shoppers are shifting spending to other times of the year.”
A Deloitte holiday survey found that 52 percent of consumers don’t rely on Black Friday as much as they did in the past and 41 percent feel the same way about Cyber Monday. According to Deloitte, 44 percent of consumers are planning to wait until December or later to shop. Presumably that’s because consumers know that the longer they wait, the more desperate retailers — and their promotions — get.
Rod Sides, vice chairman of Deloitte LLP and retail and distribution practice leader, said, “Something profound is happening that’s drastically disrupting holiday retailing. A major category shift is under way where shoppers have much more than gifts in their line of sight.”
Leading this charge are Millennials, who are fueling the jobs recovery and making shopping more of a year-round activity, driven by their life stage.
Macro Savvy is projecting weaker holiday sales gains of 3.5 percent versus 4.5 percent last year. “Households continue to spend at a strong pace on autos and other nonretail goods and services,” Badillo said, noting cars and restaurants combined are expected to increase 6 percent, after expanding 8.6 percent last year.
Amazon expects wearable technology to be a hot category. Some of Amazon’s deals include 30 percent off a Sony XBR55X900C 55-Inch 4K Ultra HDTV with a Blu-Ray player, $170 off the Sony Alpha a6000 Mirrorless digital camera with zoom lens, 47 percent off Jaybird X Sport Bluetooth headphones and 40 percent off select Frye shoes, handbags, accessories and luggage for men and women.
“Amazon won’t capture a lot just by having the same price as everybody else,” Johnson said. “Amazon typically gets market products, not unique products.” Yet Amazon is growing by double digits year-over-year, which are increases competitors Wal-Mart and Target would gladly take.
“In the end, the promotional environment will weigh most heavily on Target and Wal-Mart as they continue to lose share to Amazon,” Badillo said. “As they all vie for better pricing, will they go overboard and [negatively impact] their sales growth or will they make smarter moves that get shoppers back into stores and boost their performance?”
While Amazon on Monday said its holiday deals would include fashion and apparel, that is one sector that is expected to continue to struggle through the holiday. Badillo, for example, expects only a 3 percent gain for specialty apparel retailers during the holiday season, well below the NRF’s overall forecast. While Badillo didn’t break out the apparel sector in department stores, he said the retail channel in general isn’t thriving. “It looks tough for department stores overall since the sector is kind of flat,” he said.
As more retailers unveil their holiday deals over coming weeks, they appear not to have learned the lessons of last year, when promotions in the weeks before Black Friday — as well as online deals that started the Wednesday before Thanksgiving — generally ate into their sales for Black Friday weekend and Cyber Monday, since consumers quickly did their shopping and then stopped spending.
So as retailers’ desperation grows to grab consumers’ holiday dollars ever-earlier, the question arises: Will Christmas promotions soon start in July?