All those staples of holiday seasons gone by — sweaters, jewelry and designer handbags — are turning in respectable numbers, but they can’t keep pace with the year’s hottest commodities: shiny new electronic toys like the XBox 360, iPods, DVDs and flat-screen TVs.
There’s no one hot item driving fashion, although cold weather accessories, boots, better denim, intimates, among other categories, have fared well. Online purchasing and gift cards, in general, have proved to be strong across all sectors, while the season’s big loser appears to be soft home goods.
It’s crunch time for retailers in a holiday shopping season that was feverish out of the gate, fed by deep, margin-squeezing discounts. That fever quickly lost its heat, but regained some momentum last weekend. And one of the season’s peculiarities — customers shopping for themselves — has quieted, as the pressure mounts on the procrastinators.
With five days until Christmas and Hanukkah, markdowns are again on the rise, and could be a major factor in pulling in the late traffic needed for retailers to meet or exceed sales goals. Retailers were buoyed by an increase in traffic last week and the shift to more gift buying from the self-purchasing that drove the first half of December. That means fewer coats and boots were out the door and more fragrance and jewelry was sold.
The goal for retailers now is sales increases of 4 to 6 percent and comp-store sales gains of half that amount. Hopes are also buoyed by the favorable calendar, with Christmas and Hanukkah falling on Sunday, providing practically another full weekend for shopping. The big rush hasn’t materialized yet, but retailers still expect it.
“Toward the end of last week, the customer shifted from self-purchase to the gift-giving businesses and, with an improving weekend trend, we are optimistic that this week will be strong,” said Ron Klein, chairman and chief executive officer of Macy’s East. “The pattern for the last few years where sales exceed expectations in the week following Christmas is something we are looking forward to this year.”
New York City retailers, however, were fearing a transit strike at press time. They figured business lost in city stores, particularly their big Manhattan flagships, would be dramatic and not made up by consumers driving to other locations.
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“Business was OK, right around plan, but a little less than we would have liked. It was not a barn burner,” said David Jaffe, president and ceo of Dress Barn Inc., last week. “Maybe there was a little bit of wait and see because of that extra day; it’s a huge day, many people might also have Friday off or leave work early. We also think the week after Christmas is very important.”
According to a research report from Margaret Mager at Goldman Sachs, “Super Saturday checks showed a broad-based rise in promotional activity as 33 retailers (or 83 percent of those surveyed) were more promotional than Super Saturday ’04, as consumers dictate that price is very important this holiday selling season. Mall traffic was up from the last few weeks, but less frenetic than on Black Friday.”
“For the nation’s retailers it has become predominantly a ‘hardlines Christmas,'” according to Customer Growth Partners, a consulting firm. CGP president Craig Johnson said in a statement Monday that softlines’ share of the holiday market has fallen from over 30 percent in 1992 to barely 20 percent today. “The stars of the holiday season, once expected to be cashmere — which has lost a bit of its cachet since stacks of $39 cashmere sweaters showed up at the warehouse clubs — are almost all in consumer electronics and home improvement categories.”
He cited Apple iPods as the fastest consumer electronics growth item, and Microsoft XBox 360, Motorola cell phones and flat-screen TVs, as among strong sellers. In home improvement, “energy-efficient appliances are flying off the pallets at Sears, Lowe’s and Home Depot.” Snowblowers, power tools and fireplace equipment are also strong.
Merrill Lynch analyst Mark A. Friedman said four of the 10 largest sales volume days are still ahead. In his research report Monday, he said, “promotions have kicked in more aggressively as we expected. The stores are more crowded and we believe conversion at this point is increasing. The most aggressive markdowns were at American Eagle and Aéropostale, which appear to be incorporated into recent guidance. Quiet markdowns are in place at Banana Republic, Chico’s and Ann Taylor.”
SPECIALTY CHAINS
Dress Barn reported strong interest in spring receipts including fine gauge cotton blend spring sweaters, $24.99 to $29.99; special occasion red blouses, $44.99; active sets in terry or with racer stripes, including $29.99 zip cardigans.
Saks Jandel in Chevy Chase, Md., cited accessories, particularly bags from Balenciaga and Valentino, and sexy little black dresses and furs. Holiday traffic has been on par with a year ago.
At Relish, a boutique in Washington, D.C., owner Nancy Pearlstein said last week was the first of the season that was “really exciting for us. There was a certain amount of urgency in the purchasing.” Bestsellers included velvet blazers in bright jewel tones, distressed cowboy boots and embellished holiday sweaters.
Jaye Hersh, owner of trendy West Los Angeles boutique Intuition, said the “one for you, one for me” mentality was alive in her shop this past weekend. “We thought it was going to be more gift-driven.”
DEPARTMENT STORES
Marshall Field’s saw an increase in traffic last week, fueled by its “Holly Days” sale Dec. 11-17 that offered deep discounts, including Frango chocolate mints selling by the pound for $10.99 versus $18. The store’s “You-Win” promotion with incentive cards to win $10, $25 or $50 off a $50 purchase and a $5,000 shopping spree also sparked traffic, said a spokeswoman. “We’re really focused on making last-minute gift-giving easier for our customers,” by setting up gift tables in high traffic areas with Louis Vuitton leather accessories, wool and rabbit throws, home fragrance candles and wine glasses, among other items. Bestsellers on the Field’s Web site include Frango mints, Santa Bears, gift cards and exclusive Christopher Radko ornaments. In the stores, such items as Sweetface by JLo, beaded fur-lined vests, priced at $498, and Kate Spade iPod shuffle cases, $45, were hot.
Bloomingdale’s reported a good week and cited the most strength in contemporary sportswear, coats, dresses, designer sunglasses, premium denim and fine jewelry, said Michael Gould, chairman and ceo.
Sears Roebuck reported “good interest” in consumer electronics, including a Kodak digital camera with printer, priced at $199, regularly $280; portable Samsung DVD players; iPod Shuffles; Craftsman tool sets; Craftsman cordless drills with DieHard battery packs, and a 155-piece mechanics tool set. Tools, electronics and jewelry are widely marked down and are popular categories for holiday, a Sears spokesman said. On Dec. 23 and 24, fine jewelry will be marked down 40 to 70 percent and outerwear will be 50 to 60 percent off.
MASS CHAINS
Shoppers surged into Wal-Mart and Target last weekend to grab stocking stuffers, gift wrap and boxes and more toys. At a Wal-Mart in Danvers, Mass., toys, electronics, music and DVDs, and candy were again jammed, while the apparel department remained neat and quiet. The notable exception was activewear, where several shoppers checked out styles from Danskin Now. “I don’t know,” said one store associate when asked what were the hot fashions for teens. “I don’t see many people buying apparel.”
At a Target in Saugus, Mass., however, apparel was hopping. A mother shopped for white blouses for her daughters to wear while performing in a Christmas concert. The white blouses were mandatory, but the teens lobbied for Mossimo velvet military jackets instead. Racks of 30 and 50 percent off merchandise had three or four browsers apiece.
Each store had its surprise hits (a First Act acoustic guitar for $98.88 at Wal-Mart) and misses’ (a Merona angora-blend sweater already marked down 75 percent to $6.42 at Target.) Both retailers were raking in a pirate’s loot in glittering gold, silver and multicolored sequin hobo handbags.
LUXURY
At Stanley Korshak in Dallas, Rose Clark, vice president of merchandising, said last week was very strong and cited Kristyn Chambers belts, Bric’s luggage, knitwear and resort designer apparel from Carolina Herrera and Red by Valentino, and cowboy boots from J.B. Hill. “We’re selling resort hand over fist,” said Clark.
At NorthPark Center in Dallas, traffic and sales are exceeding expectations, said Christine Szalay, marketing director. “Our stores are reporting gains of anywhere from 6 percent to 27 percent above plan. Our stores are selling lots of cashmere, fine jewelry, home electronics and women’s apparel, including a $49,000 diamond watch from Eiseman Jewelers, Bose electronics, wireless speakers from Brookstone, glitz, glam and metallic tops from Custo Barcelona and Juicy Couture. Handbags in general are doing spectacular business. This Christmas ,it’s all about luxury,” said Szalay.
Bob Benham, owner of Balliet’s, the Oklahoma City women’s specialty store, said sales for December through last week rose 11 percent, beating the plan of 7 percent. “It’s been a really strong accessories business this holiday, including Prada handbags from $400 to $600, Cassin fur accessories from $180 to $3,000, Marcee C. Venetian glass jewelry from $200 to $1,200 and belts from Streets Ahead for $120 to $280.”
Bottega Veneta bestsellers include a large Peltro fume cabat, priced at $3,900; Tivoli sandals, $550; a Papavero Dentelle bag, $3,690; a Papavero silk crepe de chine dress, $1,820, and ball handbags, $12,800.
Stefani Greenfield, founder of Scoop, said, “Velvet embellished ballet slippers with vintage stones and headbands with similar treatment are bestsellers. Lee Angel for Scoop jewelry, such as jet beaded necklaces, are blowing out. Seven black velvet skinny jeans, Seven for Scoop dark indigo skinny jeans, and Joe’s Gigi skinny jean are strong sellers. Jimmy Choo’s metallic strappy shoes are hot.”
Jennifer Kaufman, owner of the eponymous accessories store at Beverly Center, said sales were up about 8 percent and jewelry in white gold and diamonds continues to be big, particularly with men looking for last-minute gifts. And if it’s glittery, sparkly and luxurious, it’s flying out of the cases, she said. This past week, Kaufman said she sold seven pairs of Swarovski crystal-covered decanters by Chyna White, retailing from $500 to $1,500, and crystal-encrusted iPod cases from Faith Knight, ranging from $100 to $225.
ONLINE
Frederico Marchetti, founder of Yoox, said, “One of the bestsellers is something quite unexpected: Alessi home products. Fifty-percent of the items sold out in two weeks. This was a test and now we’re going into the home area. Valentino lingerie and Zanotti sandals are very strong. Zanotti is made in Italy and sold at stores such as Bergdorf Goodman and Neiman Marcus. Marni is an incredible bestseller in the kids’ area. We sold out of our entire stock of vintage Hermès bags. We had about 20, with prices from $700 to over $2,000. They were sourced from a private noble woman who lived in Sicily. That’s why they were very fairly priced. Viktor & Rolf is getting strong results for women’s dresses. Also, a special line of dresses by Clements Ribeiro for Yoox, is selling incredibly well for holiday shopping.
“People are getting dressed up for the holidays. Last week was the record week in all of Yoox’s five-year history. We sold $2 million. It’s the week people realized they were missing gifts and it’s the time to buy in order for gifts being shipped to arrive on time. Tuesday is the last day we guarantee arrival for Christmas. People are getting more confident about shopping online.”
— With contributions from Sharon Edelson, New York; Rusty Williamson, Dallas; Evan Clark, Washington, and Michelle Dalton Tyree, Los Angeles