Holiday holdouts: Retailers courting shoppers early

Retailers are anticipating the worst holiday shopping season in years and are trying hard to attract cost-conscious customers early. Holiday sales will increase only 2.2 percent this year, considerably less than the 10-year average 4.4 percent, predicts the National Retail Federation (NRF). This Christmas season could be the worst since 2002, when sales increased just 1.3 percent.

NRF research shows consumers are cutting back everywhere they can, and retailers are aware of it.

“Retailers are at least heading into the season with their eyes wide open,” said Kathy Grannis, spokeswoman for the Washington-based trade group.

Wal-Mart is watching, but it’s not waiting. The nation’s largest retailer announced a “10 toys for $10” promotion last week and expects to have holiday decorations in most of its stores by this weekend, according to E.R. Anderson, Wal-Mart regional media director.

Wal-Mart research suggests that bargain-hunting shoppers will start early this year, and they buy presents for children first.

“The kids will be at the top of the list,” Ms. Anderson said. Wal-Mart expects to roll out other promotions in the coming weeks to keep people thinking ahead to the holidays, and other retailers are expected to do the same.

“Once a retailer as large as Wal-Mart rolls out something like this, others will follow,” said Ms. Grannis.

Indeed, the Christmas decorations were already out this past weekend inside the Macy’s store at the Fashion Centre at Pentagon City. The store’s entrance at the Northern Virginia mall was adorned with red garlands hanging from the ceiling, and the window display included children’s sweaters with silhouettes of reindeer.

Discount retailers such as Wal-Mart are expected to be the least affected by a slowdown in holiday spending, according to Ms. Grannis. But Christmas promotions during the first week of October are an indication that they are expecting to feel the effects of the economic downturn and want to get a piece of holiday sales as soon as possible.

Deloitte, the New York consulting group, expects holiday sales to increase between 2.5 percent and 3 percent this year • one of the smallest gains since 1991’s 2 percent uptick.

“Higher energy and food prices are making a dent in consumers’ wallets, and the dramatic drop in home-mortgage refinancings has dried up a substantial source of discretionary funds,” said Carl Steidtmann, chief economist with Deloitte Research, a subsidiary of Deloitte Services LP.

Mike Kraus, retail analyst for Allbusiness.com, said he doubted sales would even reach the NRF’s projected 2.2 percent gain in light of the current economic turmoil.

“People are not feeling very good about the holidays at all this year,” he said. “There’s just so much uncertainty out there, and zero consumer confidence.”

Though retailers will do their best to persuade customers to spend their money, Mr. Kraus said it may be a lost cause in some cases. “They’re in this ‘stash the cash under the mattress mode,’” he said. “I don’t think consumer confidence is going to come back that quickly to impact holiday shopping.”

In light of this, Ms. Grannis said, “Retailers are going to have to work extra hard to get consumers’ attention.”

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