Retailers brace for lean holiday profits and after christmas sales
So bleak were October retail sales for the nation’s retailers — sales plunged to the lowest level for that month since at least 1969 — that ICSC this week revised its holiday forecast downward, projecting growth of just 1 percent for November and December combined. Last year’s 2.2 percent gain was the smallest since 2002.
“The October retail environment was simply awful,” said Michael Niemira, chief economist for the International Council of Shopping Centers. The president of Target Corp. called the chain’s October sales “very disappointing,” adding that he expected the sluggishness to spill into the holiday season and beyond.
The holiday season is crucial for many traditional retailers, representing between 25 and 40 percent of their annual sales, according to the National Retail Federation.
Another forecast, by the retail consulting and market research firm TNS Retail Forward, projects holiday sales will be up 1.5 percent over last year, the smallest gain in 17 years. Furniture and home-furnishings stores are expected to see the biggest declines, Retail Forward said, reflecting the impact of the national housing market slump.
In Texas, consumer spending generally has held up better than in the rest of the nation, according to the Federal Reserve Bank of Dallas. Retail sales rose at an annual rate of 10.1 percent from December 2007 through August, compared with 0.8 percent nationally. But the slowing economy hit harder in September. Based on sales tax figures from the Texas comptroller’s office, Austin, Round Rock and Georgetown all received less revenue from sales taxes this month than a year earlier, and the growth rate slowed considerably in many other cities.
Austin sales tax revenue was down 8.8 percent and just barely ahead of 2007 for the year to date. The figures reflect retail activity in September, when the downturn was in full swing.
Statewide, revenue is 5.2 percent ahead of year ago.
“The Texas economy and, as a result, Texas retailers have fared better than the rest of the country while struggling to match last year’s same-store sales” said Ronnie Volkening, president and chief executive of the Texas Retailers Association. Although sales-tax collections are running slightly above last year’s levels, “there is no question that this will be a very challenging holiday season for retailers across the board, as consumers will be cautious and look for bargains,” Volkening said.
They can count on finding them.
On Thursday, Wal-Mart Stores Inc. said it will cut prices on thousands of items over the next seven weeks, adding new items each week.
Joseph Roth, a spokesman for Ikea, the giant furniture retailer with a store in Round Rock, promises “jaw-dropping savings on some of our customers’ favorite products” in coming weeks.
“By offering so many price points, we are well-positioned in uncertain economic times to still attract folks who value good design at affordable prices,” Roth said. Roth said Ikea is planning a special promotion for the day after Thanksgiving, when the store will have normal hours, 10 a.m. to 9 p.m. He said customers who want to be the first to know what those specials will be can sign up online (www.ikea-usa.com/signup).
At Fry’s Electronics, spokesman Manuel Valerio said the chain will have extended holiday shopping hours and “guaranteed lowest prices,” adhering to its year-round policy of matching the price of any local competitor with an identical item in stock.
Although Fry’s doesn’t provide sales forecasts, “certainly we know the economy is in a little tougher straits,” Valerio said, “but each year we do a little better than the last season.”
Ginger Reeder, vice president of corporate communications for Neiman Marcus, said she couldn’t make any predictions about the holiday season. However, she said, the Neiman Marcus Last Call store at the Tanger outlet mall in San Marcos will open at midnight Nov. 27, with promotions until 8 a.m. on Friday, the kickoff of the holiday shopping season. The Last Call store in Austin will open at 8 a.m. Nov. 28.
At the Tanger outlets, stores are hiring seasonal sales associates and “are offering outstanding holiday bargains,” said Michelle Carswell, the mall’s general manager. In addition, the mall has numerous promotional events planned for this month and next.
Tanger outlets will have extended hours beginning at midnight Nov. 27 and remain open until 10 p.m. Nov. 28. Extended holiday hours start Dec. 6 through Jan. 5, from 9 a.m. to 10 p.m. Thursdays through Saturdays.
Outlet malls, along with warehouse clubs, discount stores and supercenters, will be among the most popular places for consumers to shop this season, according to a Retail Forward survey. In contrast, department stores and other apparel-related stores “will face challenges as significantly fewer shoppers plan to shop those channels this year,” Retail Forward reports.
As with last year, gift cards, clothing, toys and books “remain the most popular gift categories, in the same order as last year,” Retail Forward said but noted that each of those sectors face “a significantly smaller share of shoppers” planning to make purchases.
At Learning Express, a toy store in the year-old Hill Country Galleria mall in Bee Cave, owners Mike and Lisa Schlageter are projecting sales to be up 10 to 20 percent from last year.
“We are bullish on our growth over the last holiday season because the Galleria had only been open a short time,” Mike Schlageter said. “The Austin economy is still very strong compared to other areas nationwide.” Schlageter said the store has hired four additional sales people, two full-time and two seasonal workers.
“The founder and president of Learning Express has said that the toy business is about as recession-proof as it comes,” Schlageter said. “When times are tough, parents will cut back in other ways in order to still have a great Christmas for their kids.”
Pages: 1 2
Tags: after christmas sales