Experts expect holiday spending to be on the rise

The National Retail Federation says total spending could reach a record $682 billion this holiday season.

ASSOCIATED PRESS

There may be no place like home for the holidays, but retail experts are predicting consumers will head for the stores in droves this shopping season and open their wallets and purses generously when they arrive.

Five holiday forecasts this season expect retail spending to rise by a minimum of 3.1 percent over last year.

The National Retail Federation, which watches spending closely throughout the year, foresees a 3.6 to 4 percent increase. Total spending could reach a record $682 billion, which would be a 4 percent jump over $655.8 billion last year, the industry group says.

Accounting firm Deloitte is the most optimistic, predicting a 4 to 4.5 percent increase.

Data firm eMarketer is the most conservative estimate at 3.1 percent, while business turnaround firm AlixPartners foresees a generous 3.5 to 4.4 percent increase. In-store analytics firm RetailNext expects spending to grow by 3.8 percent.

The National Retail Federation says total spending could reach a record $682 billion this holiday season.

“The projected uptick in holiday sales ties to four primary factors affecting consumers spending, starting with anticipated strong personal income growth,” Daniel Bachman, Deloitte’s senior U.S. economist, wrote in his forecast released in September. “Last year, disposable personal income grew 2 percent over the year to the holiday period, and we may see that rise to a range of 3.8 to 4.2 percent this season. Consumer confidence remains elevated, the labor market is strong and the personal savings rate should remain stable at its current low level.”

Cautious optimism

While the predictions generally are good news for retailers, some are wary.

Last year, retailers saw a 4 percent boost in spending, but that did little to stem what some labeled a “retail apocalypse” in which several big names like Macy’s and Sears announced multiple store closings when final sales numbers arrived in January.

In its forecast, eMarketer said there is an ongoing and intensifying battle for market share between large retailers and digital marketplaces. As a result, it predicted a moderate 3.1 percent increase because it expects retailers will continue heavy discounting during the core holiday shopping months of November and December.

EMarketer also said it expects online sales to jump 16.6 percent during the holiday season. That is in line with other forecasts that expect more holiday shopping online.

In its annual consumer survey, the National Retail Federation found that this holiday season will be the first time online shopping is more popular than store shopping.

“In our surveys, 59 percent of the population said they are going to be shopping online. Department stores came in at 57 percent, discounters were 54 percent, and grocery stores/supermarkets were 46 percent,” retail federation spokesman Ana Serafin Smith said.

“Now, all that means is they may be shopping online. They may not actually be purchasing items online,” she cautioned. And the retail federation noted that all online purchases will total $143 billion, compared to $539 billion expected to be spent in stores.

Still, “For the first time in 13 years that we’ve asked about where people will shop, the online piece has outpaced store shopping,” Ms. Serafin Smith said.

Also disconcerting for small, independent local retailers, the retail federation survey had local retailers far down the list of places where consumers will shop.

After grocery stores are clothing/accessories stores at 35 percent, electronics stores at 27 percent, then local businesses at 25 percent.

Santa sells

Between the big retail department stores like J.C. Penney, Dillard’s, and Macy’s, the online sellers like Amazon.com and Walmart.com, and brick-and-mortar discounters like Walmart, Target, Kohl’s and Best Buy, how are local businesses to get their share of the retail sales pie?

The retail federation recommends small retailers set up websites that at least shows consumers what they can find at their store, even if they cannot purchase those items online. Also, make sure they have a presence on social media, such as Facebook, Instagram, or Twitter.

Retail analyst Britt Beemer, of America’s Research Group, advises smaller clients to do two things during the holiday sales period — engage their customers through mailings with special offers, and then build a relationship with those customers when they come in the store.

“I have a client in Minnesota who calls his customers back to thank them for buying from him. It’s a lot of work but that call alone gets customers to come back and buy because they’re so shocked that someone would call them to thank them,” he said.

“The other thing you can do if you’re small is, I know a lot of clients who have gone out and hired a professional Santa and had people come to their stores for special events. The parents sign up and every child gets a 5- or 10-minute window with Santa, not two minutes like you get at the mall,” Mr. Beemer said. “And they get a free picture with Santa. You have no idea how well that helps an independent retailer. It lets the customers know the store really cares about them and their kids.”

Molly Fitzpatrick shows bath bombs that have surprises inside at Learning Express Toys at The Shops at Fallen Timbers in Maumee.

Gary and Molly Fitzpatrick, who own three Learning Express toy stores, including one in Sylvania and another in Maumee, have been acutely aware of consumers’ growing love for shopping online and they have been using different strategies to counter it.

“It’s not easy. We experienced growth most of last year but in November and December our business fell off a little bit. A little bit of that we attribute to the online impact,” Mr. Fitzpatrick said.

Part of their counter-strategy has been to expand Learning Express’ online presence. “We’re heavy on Facebook. And our other strategy is to do entertainment in the stores,” Mr. Fitzpatrick said.

The toy store has been doing events each Saturday with popular children’s characters. That gets parents and children into the store and become familiar with what Learning Express sells, he said.

“That’s really our big strategy. If people come into our store, they see the value in that. ...But the younger generation, the millennials, they may not come into the store, so that’s why we’re into social media,” Mr. Fitzpatrick said.

Like Mr. Beemer recommends, Learning Express plans to reach out via targeted mailings. This year the store will send a larger catalog in December to its customer list. The catalog will have a strong discount offer on the back.

Social strategy

At Fiddle Stix boutique, which has stores in Perrysburg and Sylvania, owner Jenelle Calverley also uses targeted mailings and social media to attract consumers. She also offers a larger selection of product lines than bigger retailers carry, and provides a service to personalize some gifts, usually the same day.

Once customers come in, Ms. Calverley said her staff does whatever it can to make a pleasant visit and encourage a return.

“It’s all about building relationship and rapport, and giving them a great experience when them come in, rather than an online experience where they just push a button and place an order,” Ms. Calverley said. 

“We’ll do anything to make the customer happy. If it’s kissing their feet, then we will kiss their feet,” she said. Last week Fiddle Stix held customer parties at its stores.

The retailer also is on social media, including Facebook and Instagram. But it also maintains visibility by advertising and product spotlight features on a local TV station.

It also will rely heavily on direct mail marketing this season and send a special mailer containing a discount to 26,000 customers.

“These will go to people that have actually been through our doors before,” she said.

The Appliance Center of Maumee always has faced competition from big box discounters and electronics chains. This year is no different except the local retailer now must confront growing online competition.

“The internet is really taking things over right now. But we just have to get the right buys and sell the right things at the right time,” said Jeff Podgorski, a sales manager with the Appliance Center for 34 years.

“But sometimes service is more important than price. If you get something that breaks down, here is where you can come to deal with that,” Mr. Podgorski said.

Like other smaller retailers, the Appliance Center uses social media and a website to reach consumers. And it also does events, like cooking demonstrations, tent sales, carnivals, and live music.

“People like the little things that are different and it helps to have someone come and enjoy our festivals,” Mr. Podgorski said.

This year, the Appliance Center is mounting a larger sales offensive — it is opening a new store on Monroe Street in Sylvania just a week before Black Friday. Called the Living Appliance Center, it is unlike anything the retailer has done and features appliances in a variety of complete kitchen settings. A customer conceivably could cook and serve dinner in the settings.

“That store is definitely going to get Sylvania people in and it may suck in some of West Toledo and lower Michigan in there. We’re hoping we can draw a little bit farther north, like Monroe and Ann Arbor, and maybe west to the little town of Lyons, Ohio,” Mr. Podgorski said.

“People like to see, feel, and touch items and here they can come in, see it, feel it touch. You can’t do that online,” Mr. Podgorski added.

Contact Jon Chavez at jchavez@theblade.com or 419-724-6128.