Georgea Kovanis/Detroit Free Press- For shoppers looking for nonstop deals and lots of excitement, this holiday season is shaping up to be a bit of a dud.
The bargain buzz and early-season discounts that were already in place this time last year are virtually nonexistent. Meanwhile, spending is expected to be up only marginally — the National Retail Federation predicts a 3.7% increase over last year, though other analysts are less optimistic. Holiday spending increased 4.1% between 2013 and 2014.
“I would say this is the season that’s going to be filled with malaise on both sides,” says Mike Bernacchi, a marketing professor at the University of Detroit Mercy.
“It’s like many other things in the economy — it has reasonable strength, consumers are relatively comfortable and have respectable liquidity with reasonable confidence,” says Ken Nisch, a retail design and branding expert from JGA in Southfield.
“Those are all things you use to get someone to date your sister-in-law — nice personality, but nothing you’re going to get excited about. I’m thinking it’s going to be a sister-in-law holiday. It’s going to be comfortable without any huge surprises.”
Why so ho hum?
1) Early promotions have been pretty uninspiring.
It’s important for retailers to create an early buzz in order to win consumers’ hearts and minds — 40% of shoppers begin their holiday shopping by October and more than half of shoppers surveyed say they expect to see holiday sales and promotions in stores before then.
And so far, few retailers are really in the game, let alone winning.
Target, for example, received a great deal of publicity for expanding its price-match policy to include more stores and to give shoppers more time to seek price adjustments — except hardly anyone uses price-matching guarantees. Only 2%-3% of shoppers actually price match.
And those who are best equipped to take advantage of price matching because they tend to be savvy about Internet research and using apps aren’t likely to do a huge amount of shopping at big box stores such as Target. Millennial shoppers — who represent the largest generation ever — will spend more of their holiday budget on travel and entertainment than shoppers 35 and over, according to PricewaterhouseCoopers.
So if a store offers something few shoppers use, what is there to be excited about?
2) Walmart is sad.
The nation’s largest retailer is having a difficult time. It has announced that sales for this year will be flat, and that next year it will post a 6% to 12% loss in earnings. For the record, Walmart says giving lowest paid employees a raise to $9 and hour in April, $10 an hour next year and making much needed investments in its stores’ online business are responsible for its financial issue.
Walmart’s money situation is important to shoppers because it will probably impact the store’s holiday plans. Thanksgiving weekend will be full of discounts as usual, but the real question is: How aggressive will Walmart be with specials before and after that? “They may try to push sales,” Jeff Green, a Phoenix-based retail consultant says of Walmart. “But to do that, they’re going to have to be even more aggressive on price, which means lower profits.”
And stockholders do not like lower profits; Walmart stock is already down about 10% this fall.
Aside from starting its layaways in August — two weeks earlier than last year — and making more merchandise available for it, Walmart has been pretty quiet. Yes, it will probably start a promotion on Nov. 1, as it did last year when it dropped prices on 20,000 items, including groceries. But I don’t think it has the swagger it did last year when it boasted all of its registers would be open during peak shopping hours.
Retail is as much about following as it is leading. When Amazon announced Amazon Prime Day in July, saying it would be better than Black Friday, Walmart launched its own July sale promising Black Friday prices.
So the point is this: If the nation’s largest retailer tones down its holiday shopping season, where’s the pressure for rivals to turn up the heat on their own?
3) Everyone is worried about something.
Things are relatively good — the housing market is picking up, and gas prices and the unemployment rate are low, though there are still plenty of people out there who are underemployed, a result of the recession. And, says Jeff Green, a Phoenix-based retail consultant, “There are still people who are afraid to lose their jobs. … There’s starting to be talk of a second recession.” And while people are spending, they aren’t going all-out.
“I don’t think the retailers have any idea how bad it’s going to be,” says Britt Beemer, chairman of America’s Research Group, a Charleston, S.C.-based consumer research company. “But they think it’s going to be bad. I think a lot of them aren’t going to play their cards right now.”
Which means stores will probably hold off on publicizing their biggest discounts and offering their biggest deals until later in the season.
How late in the season?
Beemer suggests some stores may wait until the week before Christmas to really slash prices.
4) Door busters aren’t miracle workers.
Shoppers love door busters and will wait in line for them.
Stores sell them below market price in the hope that we’ll walk through their doors, buy the buster and then stick around and buy other stuff — except we don’t. “Door busters are not something the retailer wants to do,” says Green. “What they found was that people came in for the door buster and left.”
Post recession, many shoppers are more careful about how they spend their money and are less likely to buy impulse items or pick up things they really don’t need.
Plus, stores are now open on Thanksgiving, and those door busters tend to be better than the ones on Black Friday — the day after Thanksgiving and the once traditional start of the holiday shopping season.More people shop on Thanksgiving Day than a couple of years ago.
I’ve noticed a big difference between Thanksgiving shoppers and Black Friday shoppers. Thanksgiving shoppers — perhaps tired from too much turkey or eager to get back home and for another piece of pie — tend to dash into the store, pick up a door buster and leave. Black Friday shoppers tend to linger and actually turn shopping into a social event. When everyone was a Black Friday shopper — because the stores weren’t open on Thanksgiving — I noticed more shoppers (myself included) making more impulse buys.
If door busters don’t do the job they were intended intended to do — bring in more sales — will stores back off on them?
5) Didn’t everyone buy a tablet last year?
Technology is always on sale during the holiday season. “Tablets for sure are going to be hot. I think tablets are almost reaching a point where they can’t be any cheaper. If you want an off-brand tablet, you’re going to be able to pick one up for $25,” predicts Louis Ramirez, spokesman for DealNews, a comparison shopping website.
Amazon is selling a Fire Tablet for $49.99 — a huge deal on a reliable tablet. But it gets better — if you buy five, Amazon will throw in a sixth tablet for free. And on top of that, shopping experts are anticipating eagerly the online retailer’s countdown to Black Friday sale, which, as has been the case for several years, is expected to begin Nov. 1.
Meanwhile, Best Buy, which will offer free shipping starting Sunday,is planning “Black Friday-like deals” on Nov. 7 at all of its stores. (In addition, 400 select Best Buy stores will give a free tech gift to the first 100 customers that day. Starting Oct 29, you can get details on that promotion from www.BestBuy.com/ShoppingEvent.) Best Buy says a survey of shoppers shows that notebooks and tablets are among the top 15 items on their lists.
It all sounds great, except that analysts point out the tablet market is on a decline; they’re still selling, but not like they did a couple years ago. IDC, a Framingham, Mass.-based company that tracks the technology business, says worldwide tablet shipments will decline 8% this year.
And shipments of PCs and laptops? They’re expected to be down 8.7%.
The market is saturated, and so far there aren’t a lot of new bells and whistles out there to make shoppers buy new tablets. So, basically, these are really good deals on things that lots of people already have.
6) A long time ago in a galaxy far, far away …
Retailers are counting on merchandise associated with “Star Wars: The Force Awakens” to be huge. And while advance ticket sales for the movie, which opens a week before Christmas, have indeed been huge, what are the chances that someone besides a young boy or a collector actually wants any of this stuff?
Star Wars bedding? T-shirts? Action figures?
They aren’t exactly “it” gifts.
In fact, there’s no “it” gift this year.