‘Tis the Season…already?

Has anyone else noticed that the Christmas holiday “season” starts earlier and earlier each year? This year, Walmart had their Christmas displays out by mid-September and many retailers were touting holiday sales in October! I still remember when Black Friday was the “official” kick-off to the holiday shopping season and it was surprising to see Christmas decorations up in mid-November. I keep wondering what the real-world implications of this calendar shift might mean – if anything – for retailers’ overall holiday and end-of-year sales? And, ultimately what it means for retail real estate in 2012.

I think that because retailers are still skittish from the recession and cautious about our still-fragile economy, they’re doing everything they can to offset wavering consumer confidence and a shaky climate. With a 4.1% year-over-year holiday sales increase in 2010, many are predicting a modest increase for 2011. ShopperTrak is predicting a 3% increase, while the National Retail Federation is estimating a 3.5% uptick. My own ideas are a little more conservative. Between mediocre macroeconomic indicators and ongoing pessimistic media coverage about a possible “double-dip” recession, I’m thinking we may see a flat to 2% boost this holiday season.

While retailers’ efforts to expand the holiday shopping window may prompt a little worry about diluting the seasonal marketing power, in my view, the early discounting and promotions seem likely to be a good thing for most retailers, and in turn, retail landlords. The worst-case scenario for retailers has always been having an excess of inventory after the holiday season. That’s when they have to sell what’s left for less-than-profitable prices just to get rid of it. And, we all know what happens when the retailer isn’t profitable. Throughout the recession, though, retailers have gotten pretty good at controlling their inventories, minimizing the chances of seeing rock-bottom end-of-year sales. So, I don’t think we’ll have the vacancy issues in 2012 that we’ve had in recent years.

If consumers are looking for specific items, they should really be getting started on their shopping sooner rather than later because of retailers’ controlled inventories. We all understand the frustration of finding the perfect gift for a friend or loved one and then discovering it’s sold out or unavailable in the right size. Because of this, I think we’ll see a real shift in buying patterns this season. It’s quite possible that stronger online sales will mean brick-and-mortar locations won’t feel quite as busy. The electronics sector, in particular, is already seeing a strong correlation between increased online sales and lower in-store traffic. I think apparel will continue its multi-year trend of relatively poor holiday performance as women continue to make fewer impulse purchases for themselves while shopping for family and friends. What may be surprising is that I think discount retailers will probably be fairly flat this year. In my opinion, they aren’t likely to gain many new shoppers because those who were trading down, have already done so. But, I do think luxury will see as high as a 5% increase in sales over last year.

What do you think? Please make a public comment below or feel free to e-mail me privately at jeff@jeffgreenpartners.com.

Jeff Green is president and CEO of Phoenix-based Jeff Green Partners (jeffgreenpartners.com), a leading consulting firm specializing in retail real estate feasibility, retail expansion planning, medical retail planning, location analysis and commercial land use.

Click here for past columns by Jeff Green.

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