Doors Floors and More

Cited: Wall Street Journal

It seems that consumers are being a little bit more cautious this holiday shopping season. They are doing more price comparison than impulse buying. This seems to be evident from the trends suggesting electronics sales will be more solid than apparel, particularly women’s styles. Women’s apparel sales just might plummet the season.

Spurred by the release of a hot videogame and earlier-than-usual promotions on televisions, U.S. shoppers spent 6.1% more on electronics in the first half of November the month, through Nov. 14, than a year ago, according to a recent analysis from MasterCard SpendingPulse, a unit of MasterCard Advisors.

The new data, based on MasterCard SpendingPulse data, which reflect estimates on all payment forms, including cash and checks, comes days before Thanksgiving, the traditional kickoff to the holiday selling season, when consumers traditionally spend several hundred billion of dollars. Retailers count on holiday sales for as much as 40% of their annual sales and half their annual profits.

In contrast with electronics, women’s apparel sales fell 3.3% in the first half of November. Sales in the category have fallen for more than a year, with nine months of double-digit declines from the year-earlier period since October 2008, according to SpendingPulse. Spending on luxury goods showed the largest drop, with a 9.2% year-to-year decline, after posting an increase in October, MasterCard SpendingPulse said.

Overall, U.S. households are expected to spend about 7% less on gifts this season, shelling out an average of $390, according to a report released November 22 by the Conference Board. This year, 39% of households are planning to spend less than $200, up from 35%. The Conference Board survey covers a sample of 5,000 U.S. households.

Sales of electronics in the preseason were aided by the hottest videogame of the season, Call of Duty: Modern Warfare 2. The game came out early this month and shattered records, likely boosting sales for the category overall. Call of Duty made $550 million in its first five days of release, according to developer Activision Blizzard Inc., which said that was an entertainment industry record. The results surpassed all videogame, movie box office and book sales records for five days after release.

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In addition, retailers such as Best Buy Co., Wal-Mart Stores Inc. and Amazon.com Inc. have begun earlier-than-usual promotions on TVs and videogames. And many people are buying laptops and netbooks loaded with Microsoft Corp.’s new Windows 7 operating system.

Preseason Internet sales of a range of merchandise were up 19.4% over the first two weeks of November 2008. Mark Snyder, chief marketing officer for Kmart, part of Sears Holdings Corp., said he has seen evidence that shoppers are plotting purchases. Kmart’s layaway program, which expanded to online this year, is proving popular.

“The thing that is most different this season is the preparedness of our shopper,” Mr. Snyder said. “Last year, the economy hit her right between the eyes. This year, instead of being defensive, she is being offensive and really scouring for bargains early, realizing the power is with her.”

Mr. Snyder said Kmart has also witnessed a trend toward gifts of lasting value, which is why the company is planning to sell 100% cashmere gloves and scarves, for $9.99, and down comforters, for $19.99, on Black Friday—the day after Thanksgiving and the biggest shopping day of the year for many retailers.

“Retailers have to dig deep and pull out their A-game right now, because it is a very competitive environment,” Mr. Snyder said. “Whereas you might have given something more trendy in the past, a down comforter is relevant to what is happening right now.”

For the first two weeks of November, sales within the specialty apparel category were down 5% from a year earlier. The decline was a sharp turnabout from October, when spending on specialty apparel rose 3.4%, providing a short-lived glimmer of hope before the Christmas shopping season. Men’s clothing fell by 1% in early November. Sales of shoes, which had shown two consecutive months of year-to-year increases in September and October, fell by 1.5% in the first two weeks of the month.

The National Retail Federation said earlier this fall that it expects U.S. retail sales to fall to 2005 levels in the 2009 holiday season, though the expected decline of 1% isn’t as deep as the 3.4% plunge of the 2008 holiday season.

According to a preliminary Black Friday shopping survey conducted for the National Retail Federation by BIGresearch, up to 134 million people plan to shop this Friday, Saturday or Sunday, up from 128 million who planned to last year. According to the survey, 57 million people say they will definitely hit the stores, while another 77 million are waiting to see what retailers are planning before heading out the door.

According to the survey, the biggest attractions for consumers this weekend will be discount and department stores with 66% going to discount and 62% going to department stores. Many people were planning to go to their favorite big-box store as well. Of the survey, 36% of consumers are planning on visiting clothing or clothing accessory store and 41% said they plan on shopping at electronics stores.

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My Take: I think that it will depend on two things this season, income and family size. A person’s income is going to be more important because it will indicate how much they can afford. Combined with income will be the size of their family and how many gifts we need to purchase. Of course, there will be a percentage of people who will not worry about how much they can afford.

There are going to be some people who will go out and buy gifts like designer perfume because they want to try and impress some, usually a guy. Then you have the child who knows his or her mother loves name brand perfumes and will spend their whole allowance on their mother. I would fall into this category.

Then you have the people that are not going to be spending a lot on Christmas because they do not have family. These are the people who will be visiting an online casino during the holidays. Of course, online poker can be fun, but not as fun as a roomful of people celebrating the holidays.

Then you have the people who are single-minded and on a mission to lose weight. Lose weight during the holidays? That is a unique mission! These people will go out and purchase a membership in Pilates fitness program to accomplish their task. Then they will spend their holidays with a Pilates DVD and give their family the best gift of all, their life.

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