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Studies Show, More Last-Minute Shopping This Holiday Season

Monday, December 22nd, 2008

Recent consumer behavior studies revealed that last-minute shoppers may impact holiday season sales more than ever this year.

As of Dec. 16, while the average consumer completed 47.1 percent of their shopping – down 52.6 percent from last year – over 41 million people had not even started, according to the National Retail Federation.

Most of these consumers will be looking for apparel, while 40.8 percent will shop for books, CDs, movies and video games. They ranked discounter, department and specialty stores as their three most popular shopping destinations for the rest of their holiday shopping.

Last-minute shoppers are also turning more to the Internet than they have in years past. Last week they brought the online retail market four of its biggest-selling days of the holiday season, according to comScore. Monday, Dec. 15 became the second heaviest spending day with $859 million, while Free Shipping Day on Thursday, Dec. 18 brought in $764 million.
Researchers have long figured that, with five days less than last year, a shorter shopping season could result in lower holiday sales.

“Procrastinators are in good company this year because a shorter window between Thanksgiving and Christmas this year means that the holidays have snuck up on many of us,” said Tracy Mullin, National Retail Federation president and CEO, in a statement.

But they also wonder, with this year’s recession, if consumers are simply shopping more consciously, perhaps waiting for last-minute blowout sales. As Dr. Timothy A. Pychyl wrote in Psychology Today, “Remember, all procrastination is delay, but not all delay is procrastination.”

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What This Week’s Numbers Revealed: Pessimism Rises as Prices and Spending Drop

Friday, December 12th, 2008

A collective analysis of studies released this week paint a revealing, evocative portrait of the nation’s economic environment. As prices drop, spending drops even further, as an opaque cloud of consumer pessimism remains hovering over the nation. But below, amongst all of the downward activity, researchers are searching for that cloud’s silver lining.

On the Ground Below

The Bureau of Labor Statistics, National Retail Federation, and Census Bureau released reports indicating that wholesalers and retailers are still adjusting to the economic climate, as price indexes continued to fall:

  • Retail container traffic fell in November for the 16th month in a row. With this finding in mind, the National Retail Federation maintains its hypothesis that 2008 will be the slowest year for traffic since 2004, with a year-to-year decline of 7.1 percent.

  • U.S. wholesalers lowered their inventories by 1.1. percent in October, though sales also dropped by 4.1 percent from the previous month, according to a Census Bureau report released Wednesday.

  • As reported today, wholesale prices of finished goods dropped by 2.2 percent in November, following monthly declines of 2.8 and 0.4 percents.

The Cloud of Consumer Pessimism

As these prices fell, a few research groups found record retail sale declines last month. The International Council of Shopping Centers even deemed Black Friday and the following weekend’s shopping days a “poor start to the holiday season sales,” as it observed a year-to-year decline of 2.7 percent.

The cause of these sales declines: a hibernating consumer, hiding from any temptations to spend money this holiday season:

  • The ABC News Consumer Comfort Index measured record-low levels of confidence for the fifth week in a row, as reported on Tuesday. According to the poll, 92 percent of consumers surveyed said the nation’s economy is in bad shape, while 79 percent of them rated today’s buying climate negatively.

  • Perhaps as a result, shopping ranked second only to dining out as one of the top activities consumers planned to decrease, according to a poll by the National Association of Television Program Executives and E-Poll Market Research. About 35 percent of consumers also said they planned to stay local more in their socializing, if not at home. They may also hesitate to buy any gifts full price this holiday season – though they were also willing to splurge on themselves, as Women’s Wear Daily reported.

Attempts to Find a Silver Lining

Meanwhile, researchers are taking such economic and behavioral conditions in mind, in trying to find positive news within it all.

  • Some, like MasterCard’s SpendingPulse, traced the origins of rising consumer pessimism back to the ongoing depreciation of petroleum, as wholesale prices for it and petroleum products dropped by 11.2 percent last month.
    The research group reported yesterday a 3.8 percent decrease in total retail sales, excluding auto purchases – the biggest month-to-month decline it has ever measured. The caveat: without the rapid decline of gasoline purchases factored in, retail sales growth would have otherwise remained relatively flat.

  • In its latest study, the Kauffman Foundation posed to question whether recessions were a good time to start a new business.
    The study, examining entrepreneurship up till 1975, did not reveal anything too conclusive, as the research group found a number of other factors that had to be considered. The research group also acknowledged that potential entrepreneurs would be unwilling to leave their jobs to found companies during recessionary periods.
    However, when the study excluded the Great Depression and World War II – the most unusual periods of time – the Kaufmann Foundation found that slightly more companies debuted during recession periods than expansion periods.

Overall, this week’s numbers showed that consumer pessimism remains persistent as retailers and wholesalers continued adjusting to the economic environment. Whether such feelings or downturn behavior will fade first, time has yet to tell. But either way, as the next few weeks pass by, and as the new year approaches, new perspectives could perhaps lead to new solutions – or, at the very least, a break in the cloud.

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How To: Prep Your Small Business Web Site for the Holidays

Wednesday, December 3rd, 2008

Back in October, more than 44 percent of consumers said they planned to purchase holiday gifts online, according to a National Retail Federation survey. After all, the Internet provides convenience without crowds, not to mention a great number of gifting possibilities.

But so many options for consumers could bring too much competition for small business owners – that is, unless they properly prepare their Web site for the holiday season. Not only must they provide a reason to shop, but they must also promote that reason extensively.

Small business owners should first create a list a keywords that will lead customers toward their holiday specials, whether they are particular products or special sales. These can be placed anywhere on the Web site for optimization, and in a number of forms: with pictures as alt tags, embedded in the Web site coding under meta tags, or simply included in a written blurb.

Regardless of what they are, returning and even prospective customers will always be drawn to something new, said Maria Perilli, online marketing manager for Deep Blue Interactive , a web design and Internet marketing company. Furthermore, “the more content you have on your page, the more your Web site is promoted on the search engine,” she said.

For a richer shopping experience, online retailers now have improved site searches, customer review features, and product videos. JCPenney’s Web site has all of this, while also highlighting limited-time offers. Small business owners can do this, or even create a separate page for longer-term deals.

Such microsites, like Best Buy’s Project Holiday , can also demonstrate how company products can lend to unique gift-giving. If the holiday budget permits, small business owners can even take one step further and create a pay-per-click campaign for that page, Perilli said.

As for the main web site, what should also be prominently displayed is “a call to action” – a phone number, e-mail address, or even a link to a contact form, whatever prompts more than just browsing. As for the rest of the shopping process, small business owners should first obtain, then display an updated security certificate.

“Customers are not going to buy anything on a unsecured site that’s taking credit cards,” said Matt Warnock, creative director and producer at Daisy Interactive .

Small business owners should update shipping and handling information periodically – making fees and expected delivery times extremely clear. “They need to be concerned with orders getting out in a timely fashion, especially since customers can get so panicky about getting their Christmas gifts,” Warnock said.

Finally – no matter how they may choose to update their Web sites this season – small business owners must aim to provide a shopping experience as personalized as customers may find in brick-and-mortar storefronts.

“Make sure you put your message out as much as possible … making sure the customers feel happy and positive about shopping,” Warnock said.

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Weakness Seen in Black Friday Sales, Anticipated in Cyber Monday Too

Tuesday, December 2nd, 2008

Though more shoppers sought out post-Thanksgiving discounts this year, sales figures released so far provide little hope for high profits for the remainder of the holiday season.
Traditionally at brick-and-mortar stores on Black Friday, and more recently at online stores on the following Cyber Monday, consumers have learned to eagerly pursue some of the lowest markdowns they will see over the holiday season. But with this year’s price cuts and overall consumer behavior, experts still wonder if retailers have been able to reap any profits this holiday season.
Consumer spending over the Black Friday weekend – running Thursday through Sunday – rose by 7.2 percent among more than 172 million shoppers, up from 147 million shoppers last year, according to the National Retail Federation .
But in contrast, the International Council of Shopping Centers found that retail sales rose by only 0.1 percent from the week before and by 1.3 percent from 2007.
“Black Friday sales were good due to bargains, but one good day did not fundamentally reverse the underlying weak spending trend throughout the month,” said Michael P. Niemira, chief economist, in a statement.
Lower retail sales resulted from heavier discounts, according to Richard Shaw, QVM Group investment advisor. “From that perspective, we imagine more is less this Black Friday,” he wrote in Seeking Alpha.
As brick-and-mortar store fronts cut prices in preparation for the holiday season, more retailers than ever – above 83 percent – surveyed by Shopzilla said they intended to participate in Cyber Monday. Meanwhile, the National Retail Federation found that more than 84 million people intended to shop online that day, up from 72 million last year.
Cyber Monday traditionally represents “the first significant spike in online holiday spending activity,” said Gian Fulgoni, chairman of research firm comScore , in a statement. While that day’s sales reports have yet to be released, experts have already deemed this year’s Monday to be less of a turning point and more of a continuum for this year’s characteristically cautious consumer spending
“We expect Cyber Monday to be relatively weak, since it’s very credit card sensitive,” said Richard Hastings, consumer strategist for Global Hunter Securities LLC, to Reuters. “We’re hearing consistence reports of more use of cash and debit cards in stores. That could weigh in on Cyber Monday.”
While keeping this year’s Black Friday online sales in mind – being just slightly better than anticipated – Fulgoni still considers Cyber Monday notable, but now for a different reason.
“With so much volatility right now in the variables that influence consumer spending, predicting where this online holiday season will end up has been far more challenging that in previous years,” he said. “That said, Cyber Monday may well prove to be an important indicator of whether the decline in spending that we’ve seen during the first few weeks of the online holiday season will continue for the balance of the year.”

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NRF: Fewer Online Retailers Expect Sales Increase This Holiday Season

Friday, November 14th, 2008

Though the Internet will remain a popular destination for shoppers this holiday season, fewer retailers expect their sales to increase significantly, according to a recent survey.

The National Retail Federation found that the number of consumers shopping online – 44.2 percent – has remained almost flat since last year. In the meantime however, compared to 77.5 percent of retailers last year, only 56.1 percent of them expect holiday sales to increase by at least 15 percent.

In addition, the Internet will continue to influence an increasing number of holiday purchases – at least 33.6 percent this year, compared to 30.2 percent last year. But most consumers use it to research potential retail purchases, looking up store locations, gift ideas, and prices, according to the National Retail Federation.

To draw this year’s cost-conscious shoppers, most retailers – at least 78 percent – will offer free shipping with conditions at some point during the holiday season, despite rising transportation costs. More than 40 percent of them plan to compensate costs by renegotiating with shipping providers.

The D.C. trade group and Shopzilla released its study less than a week after comScore, an Internet research group, reported for the third fiscal quarter a mere 6 percent growth in online retail sales.

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Retail Cargo Traffic Now Estimated to be Lowest Since 2004

Wednesday, November 12th, 2008

Experts now predict that 2008 retail cargo traffic will be the lowest since 2004 – a sign of cautious behavior from retailers this holiday season.

The National Retail Federation now expects cargo volume to total 15.3 million TEU (20-foot equivalent units) for the year, a 7.1 percent decline from last year. A month ago, the trade group foresaw a 6.5 percent drop in yearly retail cargo traffic, with total cargo volume being the lowest since 2005.

With retailers attempting to avoid unplanned post-holiday markdowns, “the balance between supply and demand is tougher than ever,” said Jonathan Gold, vice-president for supply chain and customs policy, in a statement.

The trade group foresees a mere 2.2 percent growth in holiday season sales – the lowest predicted increase since 2002 – and “one of the slowest years in quite some time for retail stores,” said J. Craig Shearman, vice-president of government affairs.

According to the National Retail Federation, after major growth in 2005 and 2006 – by about 9.8 and 6.7 percent, respectively – retail cargo volume peaked over the past six years at 16.5 billion TEU in 2007.

Though such a decline in traffic is significant, the year’s total volume still amounts to growth in volume since 2004, said Andrei Roudoi, IHS Global Insight manager of international trade forecasting.

Both Roudoi and the National Retail Federation predict that, once the holiday season ends, a still-strengthening U.S. dollar could help amount to a 2.3 percent growth next March. But “it is really too soon to say whether March will be an indication of any sort of trend” for the year, Shearman said.

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Back-to-School Sales: What Do They Say of the Holiday Season?

Tuesday, November 11th, 2008

In attempts to prepare for the upcoming and largely unpredictable holiday season, retail stores and experts debate whether they can rely again on back-to-school sales figures for answers.

Including back-to-college sales, back-to-school spending makes up the second largest retail season of the year. Nielsen predicted, then confirmed through findings that this past season was “shorter but more intense.” Consumers had waited for more aggressive sales and promotions to appear as the first day of school drew near.

In anticipation of a slower season, retailers cut back-to-school inventories in anticipation of a slower season, according to The New York Times . But consumers also cut their spending, resulting in double-digit sales declines and more fall merchandise left on their shelves.

Sales of digital cameras, MP3 players, desktops and printers all went down during the back-to-school season, according to CNET News . But expected declines in notebook sales and the introduction of new product categories make the holiday season difficult to compare to the months before.

In efforts to cope, retailers have been offering more bargains to move inventory throughout the next two months – resulting in a more drawn-out holiday season than they usually have to bear.

“While low inventory levels may enable retailers to avoid ‘fire sales,’ consumers are looking for deals and value,” said Stacy Janiak, Deloitte ’s U.S. retail expert.

Considering such expectations, discounters fared well during the back-to-school season, and are predicted to be consumers’ primary destination for holiday shopping. After Deloitte found that more consumers will shop at dollar stores for their back-to-school needs, the National Retail Federation found that about 70 percent of consumers planned to shop at discount stores this holiday season.

After offering school supplies for as little as 5 cents each – then seeing growth in September and October – Wal-Mart will continue week-to week savings and Rollback sales throughout the holiday season. It hopes to save consumers an additional $200 million the holiday season, as it predicts low single-digit comparable sales growth going into 2009.

In the meantime, retailers are still advised to promote their deals and values.

“Retailers will likely not be penalized for their lean staffing levels since consumers are focused on value rather than on other factors,” Janiak said. “As we saw in the back-to-school season, price-oriented retailers have an edge in this environment.”

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Sales and Discounts a Priority for This Year’s Holiday Shoppers

Friday, October 31st, 2008

As expected from bargain shoppers over the years, more than 40 percent of consumers have already started their holiday shopping, according to the National Retail Federation.

But over the past four holiday seasons, consumers as a whole have grown more cautious and calculative. This year, they plan to spend an average of $832.36 on holiday-related shopping – a mere 1.9 percent increase from last year, and the lowest increase anticipated since 2002.

Wholesalers in addition to discounters should do relatively well this season, said Michael Niemira, International Council of Shopping Centers chief economist and director of research.

“Not surprisingly, big-ticket purchases are likely to take a backseat to more traditional, basic and value-oriented goods and services,” he said in a statement.

Four years ago, holiday consumers dodged discount stores and items in favor of luxury goods and brands. Now about 70 percent of consumers plan to shop at discount stores, while 40 percent of them will consider sales and discounts as the most important factor in choosing where to shop. Only 13.4 percent ranked merchandise quality as most important today, according to a National Retail Federation survey.

With odds against them in the housing and job markets, holiday consumers even plan this year to decrease spending on gifts for family members. And with such priorities in mind, Kohl’s launched Wednesday a holiday campaign implementing aggressive savings and a resonating tagline: “Gifts That Fit Your Budget Beautifully.”

“Our entire holiday program is designed to help customers stretch their budget during an especially difficult holiday season,” said Kevin Mansell, Kohl’s president and CEO, in a press release.

But even with early promises of savings, researchers predict that this holiday season will bring the weakest growth since 2002. The National Retail Federation predicts that sales will rise by 2.2 percent; the International Council of Shopping Centers, 1.7 percent. Sales have risen an average of 4.4 percent over the past ten years.

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Company Spotlight: Halloween Costume Wholesalers

Tuesday, October 28th, 2008

Last month, the National Retail Federation found that more than a third of Halloween consumers still planned to buy a costume, while spending an average of $39.31. Based on their observations, the organization theorized that consumers were still looking for a way to escape life’s daily stresses – and, perhaps, that Halloween was the answer.

This Halloween retail season will last longer than last year’s, with Halloween on a Friday rather than a Wednesday. This could mean for retailers that “their strongest sale days are yet to come,” said Howard Beige, executive vice-president of Rubie’s Costume Company.

As for costume wholesalers, they can still sell easily what they have either deemed the “classics” or the “perennials”: witches, pirates, vampires. And more than ever, they are selling to online retailers and temporary stores, ones that stay open solely for the Halloween season. This year, costume wholesalers have been as busy as ever, to bring the new and exciting costumes to storefronts across the U.S.:

  • Spotlight Costumes
    “We are small but mighty,” said owner Kim Brown. Spotlight Costumes mainly supplies full ensembles for theatrical productions and themed weddings.However, for Halloween it also ships out to 350 brick and mortar costume shops, with most concentrated in the east coast. The former National Costumers Association president also designs each costume, the most popular ones of the wholesale line being the flapper, the pimp, the Tin Man, and Marie Antoinette.
  • Franco American Novelty Company
    Franco American Novelty Company has been distributing to an increasing amount of temporary stores, said Jay Dinhofer, one of the company’s account executives. He added to any number of their 4,000 total retail store fronts, they have shipped thousands of its Cleopatra women’s costumes. That being the company’s best seller is a testament to consumers’ growing appreciation of the industry.
    “Instead of going sexy and short – as the trend may be – this has more to do with the sophistication today that is available at reasonable prices,” Dinhofer said.
  • Disguise
    Disguise     claims itself to be the second largest costume manufacturer in the U.S. This San Diego wholesaler has sent out about a million costumes this year, said Bernice Nesbit, senior marketing manager. Disguise’s biggest sellers this year stem from their movie and television licenses. Boys will likely be seen as either Iron Man or Transformers characters, while girls will probably transform into either Hannah Montana or Disney princesses. The company also offers an easy, timely idea for adults, with their Obama and McCain masks.
  • Rubie’s Costume Company
    This New York-based wholesaler has distributed over 25 million costumes to retail store fronts this year, Beige said. And if any manufacturer/distributor could prove that movies drive the Halloween costume business, it is this one. (After all, it is the largest of its kind in the world. Rubie’s has offices in Europe and Asia, in addition to those all over North America.) Key licenses Rubie’s obtained include “The Dark Knight,” Indiana Jones and “Star Wars: The Clone Wars.” But of course, the boys cannot be allowed to have all the fun. Popular girls’ costumes this year include Sharpay and Gabriella from “High School Musical.”

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NRF: Economy Fails to Spook Halloween Consumers

Tuesday, October 7th, 2008

Bleak economic news cannot scare consumers faithful to Halloween, a recent survey shows. In fact, the average person plans to spend $66.54 to celebrate – an amount that has continued to increase over the past eight years.

“Consumers – who have been anxious and uncertain for the past several months – may be looking at Halloween as an opportunity to forget the stresses of daily life,” said National Retail Federation President Tracy Mullin in a statement.

The trade group’s survey, conducted last month by BIGresearch, revealed consumer behavior similar to that of 2002, another recession year. Back then, the average person spent $44.20, only 30 cents less than the year before.

Of more than 8,000 respondents, 64.5 percent said they planned to celebrate Halloween this year. Of these consumers, more than 50 percent said they plan to decorate their homes. Steve Rose, marketing coordinator of balloon and holiday gift wholesaler Burton and Burton, said in an e-mail that the company feels optimistic about this season, despite the state of the nation’s economy. “Consumers may be putting off major purchases like homes, cars and electronics, but they will still spend money to celebrate holidays and annual events.”

According to the National Retail Federation, consumers ages 18 to 34 still plan to spend the most of any other age group this Halloween. In 2002, they spent an average of $67 on holiday-related goods, including costumes, candy and decorations. This year, they anticipate spending an average of $83.

Retailers have also been using Halloween products as a way to market an entire season, “opening the promotional window through much of September and October,” said Tom Holliday, president of the trade group division Retail Advertising and Marketing Association.

“Much of [Burton and Burton’s] product line is treated more like ‘fall décor’ than just Halloween,” Rose said. “Things like decorative pumpkins, scarecrows, and harvest-themed products can be used all the way up until Thanksgiving.”

The holiday also still inspires at least a third of this year’s consumers to either dress in costume, take children trick-or-treating, or both.

“Parents just can’t ignore their children’s wants when it comes to dressing up,” said Kathy Grannis, National Retail Federation spokesperson. “Halloween is one of their favorite times of the year.”

The trade group also examined data from six years ago for a 2008 winter holiday sales forecast – though the outlook is not as good. Two weeks ago it estimated that sales will only rise by 2.2 percent, the slowest growth since the 1.3 percent rise in 2002.

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