Retail surveys offer mixed holiday bag

NEW YORK — With the economy in a slump all year, and the nation slammed by the terrorist attacks in September, will retailers get what they wish for at Christmas, or will consumers come together with their families and forgo shopping altogether?

Several leading retail research groups have released their annual holiday surveys, and each has its own analysis of how this season will play out. Consumers are continually hit with headlines on the war with Afghanistan, bioterrorism and layoffs, but the nation has also seen a wave of patriotism, heard stories of heroism and reprioritized the importance of family and friends.

The International Mass Retail Association (IMRA), Arlington, VA, has predicted a 3.0 percent to 4.0 percent increase in holiday sales this season. Consumers will also spend 4.4 percent more this year on holiday gifts, for a total of $863.00.

"Americans have a lot of pent-up spending," said Britt Wood, vp, research, technology and education, at IMRA's Holiday Season Consumer Survey event here last week. "People want to get out and spend. They're ready to get back to the stores."

Michael Niemira, vp and senior economist, Bank of Tokyo-Mitsubishi, based here, was one of the first to predict a positive holiday season, he said at the IMRA event, though he added, "The 2001 holiday season will not be an easy selling season for any retailer." Fortunately, discretionary spending power has increased, thanks to tax cuts, tax rebates, lower energy prices, lower interest rates and cutbacks in travel.

However, the consumer has shifted to purchase more value-oriented products, Niemira said. Even in the discount arena, shoppers are downscaling to opening price point products.

Bentonville, AR-based Wal-Mart Stores' Doug McMillon, senior vp and gmm, another participant in IMRA's event, agreed, saying that his company has been fairly frank over the last few months about how it's strengthening its opening price points. "The consumer has a very high expectation of the retailer," he said, adding that excellence in product and service will be rewarded this season. "We are looking forward to Christmas."

IMRA's findings indicated that discounters remain the number-one destination for shoppers, as they have been throughout the year, with more than four-fifths of consumers (82 percent) planning to shop that channel for Christmas. Category-dominant stores were the number-two choice for consumers, (58.3 percent) followed by conventional department stores (54 percent) and specialty stores (48 percent).

In addition, consumers are starting their shopping earlier but are not finishing earlier, Wood said, and more than 60 percent of shoppers said they will finish up in the last three weeks of the season.

The National Retail Federation (NRF), Washington, also predicted a sales climb this holiday season, citing a gain of 2.5 percent to 3.0 percent, as Americans now more than ever are resolved to observe their holiday traditions. In its holiday survey, the organization found consumers plan to spend an average of $940 per household this season on gifts, decorations, cards and food.

"Given the many uncertainties facing the country as we head into the holidays this year, consumers appear to remain dedicated to celebrating the season as they've done before," said NRF president and ceo Tracy Mullin.

The NRF found that 83.6 percent of consumers will buy for the same number or more people than they did last year. And 57.2 percent of consumers plan to begin holiday shopping in November or the first two weeks in December, while 30.1 percent began shopping before or during September, and in October.

The weak economy has resulted in consumers forgoing big-ticket items, the NRF found, and they have instead become more discriminating about what they buy, where they buy it and how much it costs. Almost a quarter of respondents (23.8 percent) said that the quality of merchandise will be the most important factor in where to shop this season, followed by sales or price discounts (18.7 percent) and merchandise selection (17.2 percent). Almost 17 percent of consumers said that location was a key factor.

Overwhelming groups of people said they will shop at the traditional department stores (76.5 percent), discount department stores (71.3 percent) and specialty retailers (68.9 percent).

However, Britt Beemer, founder and chairman of America's Research Group (ARG), Charleston, SC, predicts that fear for the future of America, with war, terrorism and the slowing economy, will make this the worst Christmas for retailers in a decade. Beemer, who claimed to have predicted the last seven selling seasons within a 0.5 percent level, said that holiday sales will drop 3.2 percent on a comp-store basis.

"This all-important retail shopping season has too many obstacles," he said. "If retailers don't win the shopping wars on Thanksgiving weekend, they can write off the entire Christmas season."

Beemer's group found that consumers will buy for the same number of people, though they expect to spend $759.66 this season, instead of $828.17 last year. In addition, the number of families who plan to spend more than $1,000 declined 20 percent this year, to 14.3 percent of those surveyed.

Where consumers will shop for their gifts has also shifted, according to ARG. Major discounters will see a 20 percent increase in shoppers, with 53.1 percent planning to shop this channel, up from 31.6 percent last year, while only 8.1 percent said that would shop the channel less.

Slightly more than 22.0 percent of shoppers said they would shop more at national department stores, 26.5 percent said they would shop less. At major department stores, 17.9 percent of consumers said they would shop more, while 34.5 percent said less.

In addition, 30.6 percent of those surveyed said they would be doing less shopping at enclosed malls, and 17.7 percent saying more, compared to 22.1 percent and 18.1 percent last year, respectively. Just over a fifth of consumers said they would avoid malls if possible.

In addition, in a wave of patriotism, 61.9 percent of Americans intend to shop at stores giving a portion of their profits to the Sept. 11 victims, and more than half will be looking for American-made products, ARG found.

The survey also discovered that 60 percent of the consumers surveyed plan to finish holiday shopping by Dec. 15 vs. 47.3 percent last year.

In addition, Myvesta.org, a financial crisis and treatment center, said its third annual holiday survey found the average American plans to spend 37 percent less on holiday gifts, for an amount of $773. Forty-four percent said that they plan to spend less than $500. Myvesta.org attributed the drop in spending to people wanting to resist adding new debt to already high credit card balances.

All three groups found that the Internet's magic does not have the same power it did a year ago. While the NRF found that 59.8 percent of consumers plan to use mail-order, catalog or Internet channels this Christmas, catalog and mail-order shopping appeared to be the two more popular choices, with 37.2 percent of respondents planning to shop those ways.

IMRA found 16 percent of its consumers plan to spend over the Internet, flat from last year.

ARG reported that on-line shopping will increase from 14.4 percent to 18.4 percent, with families planning to spend $246.15 this season, compared to $200.32 last year.

"People are bailing out of the Internet," said Beemer. Part of the reason may be that e-tailers have begun charging consumers for shipping and delivery, unlike in the past. "There's no longer a price advantage."