Retailers are resorting to novel promotions to help spur slow holiday sales.
As expected, shoppers retreated from stores and e-commerce sites after responding to discounts on Black Friday (see story below). Chain-store sales during the first full week of December slipped nearly 1 percent from Thanksgiving week, and consumers were further behind in their holiday shopping compared to the same time last year, according to a weekly sales index compiled by the International Council of Shopping Centers (ICSC) and Goldman Sachs.
Based on historic patterns, sales are expected to remain sluggish until next weekend, just days ahead of Christmas. Adding to the challenge is this year’s one-week calendar shift, which has shortened the window of opportunity for retailers.
“It’s pretty tough out there,” observed Bill Trawick, president and executive director of NATM Buying Corp., a confederation of major regional CE and appliance chains. After enjoying a lift from Black Friday weekend, sales have leveled off for group members and Trawick is projecting December to be similar to November. “We’re not seeing any real improvement,” he said, and even an expected last-minute Christmas surge may not be enough to help the group make its December numbers.
“The outlook for the final shopping days of the holiday is grim,” added Frank Badillo, senior economist for market research group TNS Retail Forward, which found that 54 percent of households plan to spend less in December than they did in November.
The deteriorating environment prompted the Consumer Electronics Association (CEA) to lower its previous fourth-quarter forecast. The trade group is now projecting flat CE sales for the period (see story above).
Ironically, retail pricing has remained relatively rational given dealers’ concerns over profitability and the steep price cuts already built into most products, Trawick said. But he does expect a wave of price promotions to hit just before Christmas, prompted by opportunistic buys on excess vendor inventory.
Pricing aside, dealers are also pullling out all the marketing stops to encourage discretionary spending. “The long slog between Black Friday and Christmas will be a day-by-day effort that means a lot of demos,” said Bob Young, principal of Young’s Appliance in Alpena, Mich. It will also require home theater of a different sort —”the theatrical experience that we pull off every day,” he said.
Best Buy, taking a page from Circuit City (which in turn borrowed the concept from Woot.com), has instituted a “Deal of the Day” program online. From Dec. 7 through Dec. 18, Best Buy is offering one new product each day at a steep discount. The offer remains available until the item is completely sold out online, and a daily preview is provided of the next day’s deal.
On Wednesday of last week, the Deal of the Day was a Garmin nuvi 260w GPS device that was reduced from $250 to $170 with free shipping. The next day’s deal was on an HP desktop bundle.
At Circuit City’s “12 Days of Christmas Deals,” which ran through Dec. 12, last Wednesday’s offer was the 255w model nuvi with free shipping and case for $230, down from $313.
Circuit City was also the focus, unwittingly, of a promotion at hhgregg, which announced last week that it would continue accepting its rival’s gift cards through Super Bowl Sunday (Feb. 1). The offer, which allows consumers to apply 20 percent of the value of Circuit City gift cards toward purchases at hhgregg, began in November as a limited five-day promotion, and has since been extended twice “due to the positive customer response,” the retailer said.
Meanwhile, Wal-Mart heralded the online availability of “tens of thousands” of Ninendo Wii consoles for $249.24 last Monday, while supplies last. “We’re thrilled to be able to provide more customers the opportunity to experience and enjoy the Nintendo Wii this Christmas,” said Kelly Thompson, chief merchant for Walmart.com.
The world’s largest retailer also continued its one-day holiday sales events, which included a 42-inch Sanyo 1080p LCD TV that was reduced by $250 to $598 for 16 hours on Saturday, Dec. 6.
Whether the various promotions will gain traction remains to be seen, although the odds are stacked against them: The National Retail Federation is projecting total holiday sales to rise a modest 2.2 percent this year to $470.4 billion — half the average growth rate of the past 10 years — while ICSC is forecasting flat sales for December.
