Retailers aren’t expecting as much coal in their stockings this holiday season as last.
As layoffs have slowed and the economy has shown signs of recovery, there is some hope in the industry that shoppers will spend more money this year than in 2008 without retailers having to slash prices.
“Retailers are going into the season cautiously optimistic,” said Greg Palme, retail group audit partner in Deloitte & Touche LLP’s Costa Mesa office.
Most retail watchers are forecasting relatively flat sales for November and De-cember, which counts for up to 40% of some retailers’ sales for the year.
The Washington, D.C.-based National Retail Federation is forecasting sales of $438 billion, or a 1% drop from a year earlier, which isn’t as bad as 2008’s 3.4% drop in holiday sales. The trade group’s sales forecast is for November and December and excludes auto, restaurant and gas sales.
In the 2008 holiday season, many retailers deeply discounted merchandise to court reluctant shoppers.
“We just don’t see that happening this year,” Palme said.
That’s because many retailers have prepared for this year’s season by significantly slashing their inventories, which could lead to fewer markdowns.
Fewer discounts could help boost sales for smaller stores such as Kovet Boutique, which has a store in Corona del Mar and is opening another in San Clemente.
“Obviously last season was awful with all the stores discounting,” said Kiy Sams, co-owner of Kovet, which carries brands including Grey Ant of Los Angeles and BB Dakota of Costa Mesa.
“I can’t compete when somebody’s offering 75% off,” Sams said.
Retailers have high hopes for Black Friday—the day after Thanksgiving that traditionally is one of the highest shopping days of the year. Since fewer stores have discounted products throughout the year, the deals offered on Black Friday could attract shoppers who have been waiting for bargains to buy.
That doesn’t bode well for sellers of luxury goods.
September luxury sales were down 8.5% compared to a year earlier, according to the International Council of Shopping Centers. But the decline is not as steep as the double-digit declines luxury retailers have faced all year.
In comparison, September sales for discount stores were off by half a percent.
Discount stores have boosted market share in the downturn with low prices and more products, said Robert Cohen, executive vice president and head of the Los Angeles office of New York-based Robert K. Futterman & Associates, a retail leasing brokerage and consultant.
Target Corp. and Wal-Mart Stores Inc. are adding more low-cost lines from designers of fashion, home goods and other products.
In addition to discount stores, retailers that offer consumer electronics, home goods and junior fashion are expected to do relatively well this holiday season.
As people continue to curb spending on travel and entertainment, they are more willing to buy things to make their homes more entertaining.
Retailers such as Sur la Table Inc., which has stores at South Coast Plaza and in Corona del Mar, and Williams-Sonoma Inc., which is at Crystal Cove Promenade in Newport Beach, also should fare well, Cohen said.
Malls’ Part
Local malls may help bring customers into stores with extra decorations and entertainment.
At Brea Mall, guest services workers plan to hand out retailer promotions and discount coupons.
“We’ve really opened our doors to do grass roots efforts,” said Anna Cotter, Brea Mall’s director of mall marketing and business development.
Brea Mall is one of Indianapolis-based Simon Property Group Inc.’s OC malls. It also owns The Shops at Mission Viejo and Westminster Mall, among others.
The mall plans several community events, such as ornament making.
A local culinary school is set to build and display a five-foot chocolate mountain at the mall.
“It’s going to bring grandmas, aunts and uncles to the mall,” Cotter said.
The Shops at Mission Viejo is hoping to woo shoppers with its expanding Apple store, a recently opened Microsoft store, a Farrell’s Ice Cream Parlour and a temporary stage for holiday entertainment.
The Shops, and other Simon malls, will bring back its holiday Shop Smarter campaign, which it launched last year.
The promotion entices people to the mall with onsite shipping, gift wrapping and its rejuvenation stations where people can get free bottles of water, take time to relax and flip through magazines or check their shopping lists.
