Did you notice Christmas promotions sharing the aisles with Halloween candy his year? Welcome to the logical extension of post-Thanksgiving Black Friday sales: calendar busters.
The outlook for retail sales is shaping up to be challenging this year, thanks to a quirky calendar and tapped-out shoppers. Retailers are responding earlier than ever to tease holiday gift dollars out of your pocketbook, and that could result in some great bargains this season.
Since Thanksgiving falls on Nov. 28, there are six fewer days between turkey day and Christmas compared with last year, giving shoppers just 26 days to get their stockings filled. The last time that happened was 2002. And given the lackluster economic recovery, household finances are still stretched. Anemic wage growth, unimpressive job creation, and lingering effects from the federal government shutdown are likely to limit consumer enthusiasm in the malls. And the Nov. 1 expiration of temporary increases in food stamp payments will inevitably redirect some spending away from gifts and into the grocery cart.
Despite the challenges to this year’s holiday spending, the National Retail Federation maintains its relatively optimistic forecast for a 3.9 percent increase in retail sales over last year’s total. Given the headwinds, such a robust performance seems unlikely. One early indication of trouble is the elevated level of inventories; retailers find roughly 6 percent more merchandise on their floors than this time a year ago, compared with 5 percent less in 2012 versus 2011. To move all that extra stuff, stores are likely to offer up juicier discounts than we have seen in any year since the recession.
And never mind Black Friday. Walmart and Toys”R” Us invaded family time last year by opening at 8 p.m. on Thursday. This year, the flood gates will burst as Sears, J.C. Penny, Kohl’s and other retailers capitulate and summon their associates away from football and pumpkin pie. Even 155-year-old Macy’s, which had long maintained it would not open on Thanksgiving, will fall in line after suffering disappointing Black Friday sales last year.
Considering the fact that retailers generate between 20 and 40 percent of annual revenue during the Holiday season, and given the shortened time period and the financial constraints faced by many households, one can practically smell the discounting in the air. Consumers should be able to drive harder bargains this year, just when a little relief is most welcome.
You need not necessarily line up in the parking lot, either. Merchants are beefing up their online holiday discount offers, as well as moving them earlier (Walmart started on Nov. 1). NRF’s internet data arm Shop.org estimates that online sales will grow between 13 and 15 percent this season, and we can be sure the deals will abound. Web busters anyone?
Finally, note that many traditional stores have reinstituted an archaic marketing channel: layaway. Many retailers offer a free layaway program with nominal deposits and up to 90 days to pay as a prudent alternative to carrying balances on high-interest credit cards. Note that cancellation fees may apply, but no interest for three months is a winning formula.
For retailers, the pressure is on. Should be a great time for holiday shoppers to wheel and deal.
Christopher A. Hopkins, a certified financial analyst, is vice president of investments at Barnett & Co. You may send your finance questions to Chris at email@example.com.
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