The day after Thanksgiving is typically a shopping frenzy, but this year, market experts hope it won’t lead to retail fallout.
The retail climate has changed considerably from 2006, when 8 percent of the nation’s disposable income came from refinanced mortgages, said Scott Bailey, regional economist for the Washington State Employment Security Department.
“This past quarter, it was down to basically zero,” he said. “Refinancing carried us through the last recession, but it won’t be there in this one.”
The number of shoppers who plan to buy gifts with credit cards is down from 32.3 percent in 2007 to 31.5 percent, according to the National Retail Federation.
Small and struggling?
Holiday sales could be especially tough for small and new retailers, said Jan Teague, president and chief executive officer of the Washington Retail Association. And a slow holiday season could mean little cash for salaries and inventory in early 2009.
Despite bleak predictions, some local retailers are faring well so far this holiday season due to careful goal-setting, targeted marketing efforts, cautious merchandising and specialized customer service.
“As they focus on service, they’ll figure out how to draw in their customer base,” Teague said. “It might be early shopping on Saturday, cocoa in the afternoon or gift wrapping – things that remind customers that they enjoy the store for that kind of unique service.”
Discount chains such as Wal-Mart, Target and Kmart could fare well this season.
“People are spending less on higher ticket items,” Teague said. “Personal care items will probably (sell) the best, where there’s less expense but more value.”
And new chain store openings in Clark County, such as JCPenney and Lowe’s, helped to add 300 new jobs in October, Bailey said.
“Consumer behavior is hard to predict around the holidays, but over the coming year, I think we’re due for a correction in both finance and retail – both sectors becoming leaner,” Bailey said.
“It’s an interesting debate about how much consumer behavior will change in the coming years – whether we’ll become more of a nation of savers, or whether, when we’re given the chance again, we’ll borrow and splurge.”
Holding steady
Lynda Elstead, owner of Vancouver Gift and Wine Cellar, said this holiday season has been significantly different than her previous six.
Sales have been “right on target,” she said, but that target wasn’t growth – it was holding steady.
“Obviously, I would like it to be more, but I’m happy I’m right here,” Elstead said. “I’m just going to save what I make in November and December and it’s going to tide me over until spring.”
The holiday season pulls in about one-third of the shop’s annual revenue. This year she’s busy with small purchases.
“They will look for something that’s a third or half of (what they spent last year),” she said. “I’m still going to be as busy, I’m just not going to sell as much.”
But wine appears to be recession-proof, at least the low-end bottles.
“High-end is now my middle (range),” Elstead said.
Hats off to marketing
Mary Sisson, owner of Vancouver-based Kazoodles, worried this year about the slow economy and legislation that could increase toy prices.
But in the first half of November, Kazoodles’ holiday sales were 24 percent higher than the same period for 2007. Sisson expects the holiday season to bring in about 33 percent of the shop’s annual revenue.
“People may scrimp and save and cut corners on adults in the family, but they don’t want their kids to think there’s no Santa,” she said. “People are seeing the value in higher quality toys that are going to last longer.”
Higher sales also came after mailing 5,000 catalogs, participating in coupon books and advertising at an educators’ conference at the Hilton Vancouver.
“We advertised to (the eductors) and we’re right up their alley,” Sisson said.
Careful merchandising
David and Stephanie Roberts opened a storefront for D and S Sci-fi Toy World in Battle Ground in August.
This is the store’s first holiday season, but the business has operated online for 13 years. Even online, about 40 percent of annual revenue came in November and December, said David Roberts.
Sales are down 20 percent from 2007 but he said fall has been busy.
“Maybe people are into the idea of shopping now while they have money,” Roberts said. “We’re more than breaking even.”
The Roberts were careful when ordering merchandise, particularly with over-hyped Indiana Jones items. Top sellers attract multiple generations, such as reissued GI Joe toys and Star Wars items, which make up the majority of sales.
“We’re a small company geared to outlast any economic (issues) unless we have a massive depression, but with the way our economy is built, I don’t expect that,” Roberts said.
Charity Thompson can be reached at cthompson@vbjusa.com.