The 2008 holiday retail season will be dominated by deep promotions that might cut into retailers’ profit margins, said many retail analysts and economists. The gloomy forecast came on the heels of news on Dec. 1 that the American economy has been in a recession since December 2007, according to the National Bureau of Economic Research, a private, nonprofit group of leading economists.
The continuing news of a poor economy had veteran retail analyst Richard Giss advising retailers to remain steadfast through a tough season. “This is not a year to fight for market share,” Giss said. “This is a year to survive.”
The season started with heavy discounts and colorful sales promotions on Black Friday, the day after Thanksgiving, and the promotions gave retailers a small sales increase for the first week of the Christmas holiday season.
While the bump in sales for the one-day event, on Nov. 28, was estimated to be about 7.2 percent over last year, sales were still flat for the week. According to the International Council on Shopping Centers, sales for the week ending Nov. 29 increased only 0.1 percent compared with last year. (For online sales results, click here.)
Giss, the analyst, has been advising retailers since 1969 for Deloitte & Touche. He said this Christmas season has been one of the toughest he can remember, and it will test the resourcefulness and grit of retailers. “I continue to be amazed at the creativity and resilience of retailers,” he said. “They will find ways to survive and prosper even in hard times.”
Priming sales
Mall managers offered generous, unprecedented freebies to attract an economically weary consumer to retail centers. For the first time in 25 years, the Beverly Center shopping mall in Los Angeles offered free parking in its 3,000-space parking lot on Black Friday.
Also that day, shopping-center officials at the luxury mall gave out 500 free pancake breakfasts from restaurant Grand Lux Café, all in the name of getting consumers shopping early between 8 and 9 a.m.
At Old Navy, a division of San Francisco–based Gap Inc., merchants on Black Friday were giving out free Samsung Pebble MP3 players while supplies lasted to those who spent more than $20 at many of Old Navy’s locations.
Other retailers offered sweeping discounts. At the Los Angeles retail center Citadel Outlets, retailers typically offer discounts ranging from 30 percent to 75 percent off, according to Anita Boeker, a marketing manager for the retail center’s landlord, Craig Realty Group. However, on Black Friday, retailers such as Tommy Hilfiger gave up to 40 percent off the already-existing discounts just to get crowds to shop during the pre-dawn hours of that day.
The freebies and discounts offered by major retailers and shopping centers convinced many owners of independent boutiques that they had to strive to give a distracted, perhaps beleaguered shopper something too unique to ignore.
On Black Friday, Los Angeles boutique Xin, located at 8064 Melrose Ave., hosted a sample sale where contemporary designers such as Eva Franco sold garments from their Fall and Holiday collections for up to 75 percent off. Xin co-owner Neely Shearer said her next step is to host other special events to survive the holidays. “My customers own closets filled with clothes,” Shearer said. “I’d like to offer them something special. [Shopping] has got to be a treat for them.”
Finding the right treat could be a major production. Los Angeles boutique Sirens & Sailors will co-produce a sales bazaar of more than 30 Los Angeles designers and boutiques to pique the interest of an anxious customer, said Jennifer Phillips, the store’s owner. She hopes the mix of sales and live performances will open up wallets. The sale will be held at a warehouse at 112 Llewellyn St. in Los Angeles on Dec. 14. Bands and DJs will perform during the retail event, which is called Compound Holiday Bazaar. “Sales have completely dropped in the past few months,” Phillips said. “Some people are shopping, but they’re not spending money. They are really spending the day out.”
For the great majority of retailers, there will be no way to avoid putting merchandise on sale during this holiday season, said retail analyst Jeffrey Van Sinderen, who works for Los Angeles–based financial-services firm B. Riley & Associates. “You’ll see huge clearance sales at outrageous discounts, and retailers don’t have a choice but to promote these sorts of events,” he observed.
Giant discount retailer Wal-Mart Stores Inc. is the one obvious winner during this season, Van Sinderen said. Specialty retailers of misses styles and luxury retailers have been suffering during the past couple of months.
The freebies and discounts offered by major retailers and shopping centers convinced many owners of independent boutiques that they had to strive to give a distracted, perhaps beleaguered shopper something too unique to ignore.
On Black Friday, Los Angeles boutique Xin, located at 8064 Melrose Ave., hosted a sample sale where contemporary designers such as Eva Franco sold garments from their Fall and Holiday collections for up to 75 percent off. Xin co-owner Neely Shearer said her next step is to host other special events to survive the holidays. “My customers own closets filled with clothes,” Shearer said. “I’d like to offer them something special. [Shopping] has got to be a treat for them.”
Finding the right treat could be a major production. Los Angeles boutique Sirens & Sailors will co-produce a sales bazaar of more than 30 Los Angeles designers and boutiques to pique the interest of an anxious customer, said Jennifer Phillips, the store’s owner. She hopes the mix of sales and live performances will open up wallets. The sale will be held at a warehouse at 112 Llewellyn St. in Los Angeles on Dec. 14. Bands and DJs will perform during the retail event, which is called Compound Holiday Bazaar. “Sales have completely dropped in the past few months,” Phillips said. “Some people are shopping, but they’re not spending money. They are really spending the day out.”
For the great majority of retailers, there will be no way to avoid putting merchandise on sale during this holiday season, said retail analyst Jeffrey Van Sinderen, who works for Los Angeles–based financial-services firm B. Riley & Associates. “You’ll see huge clearance sales at outrageous discounts, and retailers don’t have a choice but to promote these sorts of events,” he observed.
Giant discount retailer Wal-Mart Stores Inc. is the one obvious winner during this season, Van Sinderen said. Specialty retailers of misses styles and luxury retailers have been suffering during the past couple of months.
However, some retailers reported good crowds during Black Friday. There were more than 200,000 people who visited high-end South Coast Plaza in Costa Mesa, Calif., on Black Friday, said David W. Grant, the retail center’s general manager. He credited the good crowds to his center’s mix of retailers and a shot of confidence after the incoming Obama administration announced on Nov. 22 a possible economic stimulus plan.
While sales might have been generally slow, retailers reported certain items were quite popular. At the Glendale Galleria in Glendale, Calif., consumers were buying electronics and Disney accessories, such as school supplies bearing logos of the “High School Musical” movie series. Girls’ pajamas with graphics of Disney princesses also were popular.
At the LASC boutique in West Hollywood, Calif., partner Don Zuidema said denim pants received a slight boost in sales during the Black Friday weekend. At Xin, customers were willing to make impulse buys on items not commanding a giant price tag, such as lingerie and accessories.
