Slash and Burn
Jennifer Marks -- Gifts & Dec, November 29, 2004
Since Black Friday no longer serves as a fool-proof barometer of holiday shopping trends, we'll probably have to wait another 10 days or so before figuring out whether the next four weeks' activity will stand as the kick-off of a retail revival going into 2005 or another who-blinks-first promotional fest.
Remember that the first couple of weeks of the traditional holiday season last year were distressingly lackluster. But consumers cranked it up closer to Dec. 25, and, in the end, the 2004 holiday season was pretty decent for most and downright terrific for others.
But one piece of news gives pause: A recent consumer survey by the National Retail Federation found that, for the first time, more shoppers intend to do their holiday spending with debit cards than credit cards.
The NRF takes the glass-half-full view on the situation, interpreting the findings to mean that debit cards primarily free consumers from having to fuss with cash. A more likely explanation would be that consumers have ingested about as much debt as their bellies can comfortably hold. With the automotive society still feeling the pinch at the pump and interest rates back on the rise, it's no surprise to find more shoppers choosing the pay-as-you-go plan.
What that means to retailers may not wind up mattering too much. So far, the official holiday prognosticators are projecting sales gains of 3 percent to 4.5 percent.
Moreover, the outlook from some 15 or so retailers that reported their third quarter results in the days before Thanksgiving was also generally positive. Most said their inventories were well-positioned — i.e., there'll be enough stuff left on the shelves for the final weekend before Christmas but not so much that clearance will be a problem.
Out of control promotional selling? Fuggidaboutit, they said. This year, by God, consumers will learn to buy when the merchandise is in front of them, or they'll go wanting.
Or will they? A post-election poll released by America's Research Group found that 65.6 percent of consumers still expect price drops before Christmas. While only 20 percent said they will hold out for the price cuts before shopping, a whopping 96 percent said they will “radically slash” their spending if they don't start seeing those 50 percent-off signs at their stores.
What this means for the home textiles category in the next few weeks is probably negligible. The bigger question is what it portends for the post-clearance period's round of white sales. Will consumers, who are concerned about minding their pennies in December, suddenly fling open their wallets a few weeks later?
Perhaps that's when we're really going to see the wild price promotions, particularly with the first wave of quota-free sheets and towels rolling in from offshore.
Fasten your seatbelts.
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