Retail industry experts say shoppers will be out in droves the day after Thanksgiving, but expectations for the rest of the holiday shopping season remain muted as economic worries and a wave of toy recalls weigh on consumers’ minds.
“It’s a very odd year. There are just more things out there affecting consumers than ever before,” said Britt Beemer of America’s Research Group. “I think it’s going to be a tough retail season.”
The National Retail Federation estimates holiday sales will be up 4 percent, to $474.5 billion, compared with last year, but other analysts are predicting only a 2 percent increase.
This season is expected to plunge below the 10-year average increase of 4.8 percent annually. If that holds true, 2007 would have the slowest holiday sales growth since 2002.
Surveys and forecasts by a variety of associations and analysts offer a mixed picture of shoppers’ mindsets.
Some say housing and mortgage market concerns along with rising energy costs and a weak dollar will not affect holiday shopping plans. Other say those factors will cut into how people shop and when.
The difference could rest on economics. Luxury and high-end buyers are expected to spend strongly, while households with incomes between $25,000 and $35,000 are expected to be the most pessimistic about holiday spending.
America’s Research Group is reporting that nearly one-third of all Americans feel worse off financially this holiday season compared with last year’s, when only 18.5 percent felt that way. Higher food costs, increased fuel costs and the war in Iraq are factors in how confident consumers feel about spending money. ARG surveyed 1,000 people between Nov. 1 and 4.
More hope for early coups
Economic concerns appear to be why many consumers, 48 percent, say they plan to shop the day after Thanksgiving, or Black Friday, to look for huge deals, Beemer said.
This is a significant jump from last year, when only 32 percent of consumers planned to shop on Black Friday.
Retailers are expected to offer significant discounts on Black Friday, with some already offering lower prices this weekend.
“What is going to happen is you’ll just see more of those dollars get spent early, and then there won’t be dollars to spend during the regular season,” Beemer said. “As you get closer to Christmas, in that last week, there may be another surge because retailers will start slicing prices and consumers will come back out.”
Store executives and mall managers are generally more optimistic about the season. Discount giant Wal-Mart reported third-quarter profit that surpassed projections, and company executives say consumer spending might be stronger than anticipated.
“We are going to see early turnouts,” said Susan Valentine, senior vice president consumer experience for Macerich, which owns Twenty Ninth Street mall in Boulder. “I think advertising efforts are really encouraging people to get out early to shop.”
At FlatIron Crossing, management expects a solid holiday season based on a good year so far.
“We do such a large volume that an increase of any level shows success. We like that,” said Heather Drake, senior marketing manager for the Broomfield shopping center. “That is still a strong season in our eyes.”
According to the International Council of Shopping Centers, consumers on average will spend $1,116 this season on gifts, travel, entertainment and decorations. Of those surveyed, 53 percent expect to spend the same as last year, 19 percent plan to spend more and 27 percent say they will spend less than last year.
The survey of 1,009 people was done Oct. 25-28 and has a margin of sampling error of plus or minus 4 percentage points.
“Retailers are in for a somewhat challenging holiday season as consumers are faced with numerous economic obstacles,” NRF chief economist Rosalind Wells said in a statement. “With the weak housing market and current credit crunch, consumers will be forced to be more prudent with their holiday spending.”
The popularity of gift cards also contributes to the issue because gift cards are not counted as sales until they are used. So most of those may show up on January sales reports.
Most retailers are not fearful of the predictions, at least not now.
“I wouldn’t consider that a failure,” Valentine said about the 2 percent to 4 percent increase estimated for this year. “We’ve had other seasons where we have experienced this, but we made it through, and people still come out to shop and we move forward.”
Valentine focuses on bringing traditions and experiences to consumers that include horse-drawn carriages and Christmas tree lighting. Those experiences, she said, help bring consumers to the center.
“They get into the holiday spirit, and they walk through and see the stores incredibly decked out and it encourages that festive atmosphere where they are comfortable and want to shop,” Valentine said.
Toy recalls may affect sales
Still, the toybox scare, surrounding the millions of recalled toys mostly made in China, will affect how consumers do their holiday shopping, said Gloria Park Bartolone, vice president, Maritz Research’s Retail Group.
A Maritz Poll found that 53 percent of consumers plan to buy toys this season and 77 percent of those said the recalls will play a part in how and where they buy toys. Of those concerned about the recalls, 38 percent said they would check labels for country of origin, 22 percent said they will not buy toys from China and 9 percent said they will buy only American-made toys.
That could prove difficult, because about 80 percent of toys sold in the United States are made in China.
The online Maritz Poll, conducted Oct. 8-11, featured responses from 993 people and has a margin of sampling error of plus or minus 3 percentage points.
“Toy safety is clearly a concern for consumers this holiday season and you wouldn’t know it by looking at American toy aisles,” Bartolone said. “There’s little or no signage to restore customers’ confidence in toy safety, and most associates are not informed about the recalls. Retailers need to prepare … and fast.”
Elizabeth Aguilera: 303-954-1372 or eaguilera@denverpost.com
Black Friday
The day after Thanksgiving is commonly referred to as Black Friday because it was traditionally considered to be the day when retailers moved from financial loss, or red, to profit, or black.
