Byline: Sharon Edelson

NEW YORK — It may be time to rethink Christmas.
With less free time and inclination to shop, consumers are no longer making the holiday the retail happening it once was. And after two years of lackluster retail sales, industry experts are questioning whether stores put too much faith in Christmas.
While Christmas is still clearly the most important selling period of the year, experts suggest that retailers put more advertising and promotional muscle into other times of year.
They caution retailers not to build inventories too high at Christmas, to try to turn goods faster and perhaps even to make the transition from winter merchandise to resortwear sooner. That strategy seems to be working at a number of stores, including Saks Fifth Avenue and Barneys New York.
Sure, the procrastinators will lead the last-minute rush on the stores. But Christmas ’95 is shaping up to be a disappointment, and the season could produce less than the traditional 40 percent of yearly profits. With consumers feeling less generous, Deloitte & Touche projects they’ll spend an average $685 this Christmas and Chanukah, against $714 last year.
“You should not put all your eggs in a holiday basket,” said Carey Watson, senior vice president of marketing at Burdines. “There are a lot of other opportunities in the course of the year such as Mother’s Day, Valentine’s Day, Father’s Day and fashion opportunities in the spring and fall.”
Even though consumers are spending less, there are more of them in the stores during Christmastime, more than at any other time of year, and resourceful retailers are trying to maximize sales opportunities with non-gift items.
“People are in the store with the excuse of buying gifts for others, but then find they need new resort clothes or a new coat,” said Rose Marie Bravo, president of Saks. “Most people are buying a lot of inexpensive products at Christmas. It’s the essential holiday of the year, but what we overlook is that people are also buying for themselves. It’s a time of year when you have a lot of traffic in the stores and you want to take advantage of that traffic.”
Stores that have not adopted alternate strategies are nervous — and with good reason. Christmas lists are shorter. Here’s why:
* Baby boomers are rebelling against rampant commercialism and heavy gift spending.
* The graying of America has parents more concerned about paying college tuition for their children and saving for retirement.
* People have less time and patience for crowded shopping malls.
* Many women, who traditionally led family shopping excursions, are now employed and time-starved.
* Consumers feel they are getting ripped off, even with markdowns.
* There is a perception that crime is on the rise in shopping malls.
Given the restrained mood, some retail analysts are lowering their fourth-quarter projections. Prior to Thanksgiving, Peter Schaeffer, senior vice president of research at Dillon, Read & Co., predicted 3 to 5 percent increases in the fourth quarter. Now, he estimates sales will be flat to 2 percent ahead.
Consumers are shifting their spending from apparel to vacations, dining out and theater tickets, according to a Kurt Salmon & Associates study in September.
“We may be seeing growth in entertainment-related gift certificates at the expense of apparel this season,” said Shawne Mastronardi, director of retail services for Kurt Salmon.
What’s more, the study found that shoppers have become so conditioned to sales that 70 percent said they planned to buy almost all their merchandise on sale. More than 40 percent said they planned to wait until the end of the season to shop.
More than 90 percent of consumers in the Kurt Salmon study said they felt they paid too much when they paid full price.
“It’s time to rethink Christmas as such a centerpoint to the economic well-being of retailing,” said R. Fulton Macdonald, president of International Business Development. “Christmas has become less important to consumers. It’s part of the baby boomers hitting a change of mind-set. Everybody is more skeptical about everything.”
The bullish market on Wall Street has created tremendous wealth for some and reinvigorated the luxury goods industry, especially the likes of Gucci, Prada, Ferragamo, Chanel and HermAs. The vast majority of Americans, however, are still preoccupied with job security and individual debt. Spending vast amounts of money on gifts is no longer politically correct.
While department stores normally hope to earn 40 percent of yearly profits at Christmas — for stores like Toys ‘R’ Us, the figure is closer to 70 percent — the intensely promotional environment surrounding Christmas has made such goals difficult to attain.
“There’s no question that not only has the percent of Christmas revenues decreased, but the percent of Christmas profits has decreased,” said Arnold Aronson, a principal of Levy, Kerson, Aronson & Associates. “Retail revenues and profits are falling victim to the seemingly incurable trend of price promotion, and it’s now spread to the all-important Christmas selling season.”
This year, The Limited’s Express and Lerner New York divisions began advertising holiday specials in windows before Thanksgiving.
Schaeffer said he was surprised by the number of better to high-end merchants that ran early-bird sales and coupons close to Thanksgiving.
“The Giorgio Armani boutique on Madison Avenue ran a one-day sale the day after Thanksgiving,” he said. “Bloomingdale’s ran coupons after Thanksgiving. Christmas ties are marked down at Macy’s — a week and a half before Christmas! That’s crazy.
“This is all going to have an effect on the margins,” Schaeffer said. “When Christmas comes late [it falls on Monday this year], the margins deteriorate and stores started price promoting earlier this year.”
“There are now 12 months of promotions so the customer does not see Christmas as differentiated or a compelling reason to shop because the Christmas business is losing its specialness,” Aronson said. “Retailers have got to start drawing the line and trying to bring back the unique specialness of this all-important holiday selling season.”
Carl Steidtmann, director and chief economist of Management Horizons, the consulting division of Price Waterhouse, said, “The competitive structure of the retail industry includes the overstoring that exists, combined with weaker-than-expected consumer demand. Plus, there are a number of retailers in bankruptcy or close to bankruptcy, which forces them to be much more focused on cash and forces them to be more promotional.”
Bloomingdale’s has been advertising its share of Christmas specials, but the chain has also made an effort to set itself apart by offering a large selection of exclusive merchandise through its Only at Bloomingdale’s program.
“Everything has changed about shopping,” said Michael Gould, chairman and chief executive officer of Bloomingdale’s. “There’s a lot of cross-shopping and cross purposes. The customer can spend discretionary income on a lot of things, three more days of vacation or dining at restaurants. During the holidays, people shop closer to need. That just seems to be the way it is.
“My attitude is that Christmas is not about the period between Thanksgiving and Christmas,” Gould said. “It’s about what you do all year long.
“All in all, the business is there to be had at Christmas,” Gould said. “It’s all about execution. But we have much more of a day-in-day-out business than other people.”
Bloomingdale’s does special promotions around Father’s Day, Mother’s Day and Valentine’s Day, which line up right behind Christmas in terms of importance, a spokeswoman said. “There are always merchandise presentations surrounding those holidays,” she said. “There’s always something being introduced that’s a perfect gift for that time of year. We do displays, in-store signage and direct-mail campaigns for those holidays.”
Sears, Roebuck & Co. tries to sell a wide range of merchandise using seasonal promotions all year long, a spokeswoman said.
“Because we have hard lines as well as soft lines, we have other seasonal opportunities beyond apparel,” the spokeswoman said. “It won’t be long after the first of the year when we’ll be getting ready to promote our spring lawn and garden equipment. We have about a dozen significant promotional events strategically positioned throughout the year. We make an effort to sell hard throughout the year.”
The spokeswoman said Sears does 40 percent of its annual profits at Christmas, but the percentage of activity naturally occurs during the season.
“It’s not because we’re concentrating our efforts on it,” she said. “We do extra things for the holiday season, but that’s not at the expense of the rest of the year.”
“The business has become very competitive,” Saks’ Bravo said. “We look at every single month as an opportunity and try to figure out ways to capitalize on other gift-giving periods, like graduation, weddings, hostess time in the Hamptons, Mother’s Day, Father’s Day and Valentine’s Day. Still, I don’t think there’s anything quite like Christmas.”
Barneys is showing a lot more resort and spring merchandise on its floors this time of year and says customers are responding to the new fashion offerings, according to president Charles Bunstine.
“Historically, no matter what we do, Christmas is still a very strong part of the year,” said Neal Goldberg, senior vice president and general manager of Macy’s Herald Square. “Since the merger with Federated, Macy’s has been aggressive in planning our entire year. We don’t look at December and say, ‘Let’s do everything then.’ We are very good at looking at opportunities and maximizing our business throughout the year.
“Based on the traffic coming through the store, Christmas is still important to shoppers,” Goldberg said. “In this store, we still have a lot of tourists and a lot of families. We’re still cautiously optimistic that it’s going to be a good season. Very rarely do we see a real good November leading to anything but a good December.”
But Dillon, Read’s Schaeffer is forecasting a disappointing Christmas based on the overall poor showing Thanksgiving weekend. Nor will the added weekend of shopping help matters, he said.
“The retailers that feel that they’re going to pick up an extra weekend are dreaming,” Schaeffer said. “The longer people have between Thanksgiving and Christmas, the more they procrastinate and don’t buy anything. When Christmas is on a Monday, people travel over the weekend. Also, the stores in the city, like Macy’s, will get hurt because there are no office workers in the city over the weekend.”
“We’ve had a string of lousy Christmases,” said Robert Buchanan, a retail analyst at NatWest Securities. “We have a whole generation of retailers who were brought up in the Eighties and are way too optimistic. Somehow these guys have got to realize that things have dramatically changed. People aren’t spending that much on discretionary items anymore.”

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