Retailers cautious for holiday sales lift

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Wal-Mart is optimistic that buyers seeking discounts will help lift the retailer this holiday season
Wal-Mart is optimistic that buyers seeking discounts will help lift the retailer this holiday season

Practicality may rule this holiday season. During a conference call this week with reporters, the National Retail Federa­tion and Bigresearch said that many of the same factors that have hurt retail sales for much of this year will continue to have a negative impact during the upcoming holiday season.

In a consumer survey conducted by Bigresearch at the beginning of September — before the most recent round of woes in the financial market — 39% of respondents said they plan to spend less on gifts this year compared to last. This compares with 30.9% who gave this answer last year. Less than 5% said they plan to spend more on gifts, while 21% said it's too early for them to decide.

The NRF forecasts that sales will rise 2.2% during the November to December holiday selling season. This gain would fall below the 10-year average of 4.4% holiday sales growth and would repre­sent the slowest growth since 2002, when holiday sales rose 1.3%.

Tara Raddohl, a senior communi­cations manager with Wal-Mart, said the big box chain did not have any specific holiday forecasts but believes its “one-stop shopping experience” would entice belt-tightening consum­ers to the store this holiday season.“We believe our customers will be look­ing to stretch their dollars more than ever this holiday season, and our goal is to provide solutions for our customers whenever they decide they are ready to buy,” she said.

“Retailers are going to have their work cut out for them this holiday season,” said Scott Krugman, a spokesman for the NRF. Luxury retailers, which have been immune to the effects of the economy in recent years, will likely feel a pinch this year, he added.

There are a couple of bright spots, how­ever. The electronics category should do well this holiday season, as excitement around new products drive sales.

With consumers feeling like they have no control over so many things affecting their lives right now, such as gas prices and the housing crisis, many “are tak­ing control of the things that they can control,” said Phil Rist, VP of strategy at Bigresearch. This may mean deferring some purchases, but it can also translate to “doing more online browsing, price comparison and online shopping,” Rist continued.

Bigresearch's recent survey indicated that 49% of consumers have become more practical in their purchases, with 56% focusing more on what they need instead of what they want and 45% becoming more budget-conscious. Consumers are also using credit cards more for necessities such as gasoline and groceries.

As a result, the messaging from many marketers this holiday season is likely to be focused on the idea of “practicality.”

“The definition of practicality doesn't mean cheap,” Rist said. Instead, it can mean high quality with lasting value at a good price.

Already, Target's marketing has moved away from a focus on design to practical decision-making, Rist pointed out.

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