2013 Holiday Season: A Lump of Coal?
I don’t want to be a Grinch, but things aren’t looking too promising for retailers who were hoping to end the year on a holiday high note. But, before I get into more predictions on retail sales this holiday season, it might be a good idea to talk a little bit about why I’m feeling so lukewarm about the prospects for a 2013 end-of-year bonanza.
Let’s start with the fact that, as I’ve discussed recently in this space, back-to-school sales were extremely disappointing. While there were, in retrospect, a few signs of trouble, the sluggish back-to-school numbers were the first real indication that consumers are not as positive about economic circumstance as we perhaps thought they were not too long ago. When you factor in the fact that Halloween projections are also extremely soft, and that consumer confidence fell sharply last month, and you start to see a worrying trend developing. I think it’s noteworthy that seasonal job gains are expected to remain flat, with many big brands actually hiring fewer season employees than they did last year. Target is hiring 20,000 fewer seasonal employees than last year, and Kohl’s hiring is down more than 5% over 2012 numbers. It would be a mistake not to consider the larger macroeconomic and geopolitical factors, as well. From unrest overseas to the ongoing saga of the government shutdown, there isn’t really much big-picture economic news occurring that really has the potential to move the retail needle in a positive direction.
Factoring all of that into the equation, I think it’s very difficult to forecast much, if any growth. I predict a holiday season that is either flat or very close to it. That wouldn’t be the worst thing in the world, of course, and the silver lining is that flat holiday sales numbers are certainly better than a decrease in year-over-year sales. But anemic seasonal sales figures would be a bit of a disappointment for an industry that has generally been moving slowly but steadily in a positive direction for the last couple of years. As always, some sectors will perform better than others (or at least not as poorly as others). Consumer electronics will likely remain strong, but I see apparel, on the other hand, as being extremely soft.
One surprising trend that stands out to me is that, even given the slowdown, discount stores have not really seen the significant increase in sales that you might typically and intuitively suspect. Walmart and Target have been, at least by their standards, bringing in fairly mediocre numbers. Normally I would feel comfortable predicting that those are exactly the kinds of retailers who might expect to do better-than-average in a slow holiday season, but the only retailers who have been exceeding projections lately have been the off-price merchants. That suggests that people are still looking for quality at affordable prices, but not necessarily turning to discount merchandise to the degree that they might have in the past.
Another interesting note is that this sluggishness is perhaps not entirely unexpected by retailers, which might be part of why they have started holiday promotions and programs earlier than ever. WalMart, for example, started its holiday layaway program in late August, which is certainly the earliest that I can ever remember. The big caveat, of course, is that this is still early — things can and do change. But with holiday sales right around the corner — and, in fact, many already in full swing — retailers who are hoping for a big turnaround are running out of time.
In the interest of full disclosure, I have been a little bit surprised to see that many very knowledgeable and informed institutions have been releasing holiday sales forecasts that are much more optimistic than my own. The International Council of Shopping Centers (ICSC) officially projects a 3.4% increase, and ShopperTrak came in at 2.4%. Deloitte leads the pack, with a forecast of a 4% to 4.5% increase (similar to last year’s growth). In general, I’ve seen projections running anywhere between 2% and 4%, which strikes me as surprisingly high given the current economic and retail context.
Even if we do end up seeing little or no growth this season, there is not much reason to think that it heralds a longer term problem. I think this is more of a correction, rather than the kind of significant economic jolt that would require dramatic course correction from the retail community. How do you see the season playing out? What will retailers be able to cross off their wish list this year? Leave a comment below or contact me at [email protected] to continue the conversation.
Click here for past columns by Jeff Green.
OfficeMax unveils services center
OfficeMax has unveiled a Services Center in stores nationwide to provide business owners with essential operations support.
The OfficeMax Services Center offers an extensive portfolio of more than 40 services designed to relieve administrative burden and assist businesses with critical needs, including web design and maintenance, 24/7 On-Call Tech Support, printing and document management, marketing materials, shipping, credit card and payroll processing, human resource services and legal assistance.
"This new data advances what we found in extensive national research with business owners of all sizes," said Kim Feil, OfficeMax EVP and chief marketing and strategy officer. "Business owners spend a lot of time conducting support work that, while critical, takes them away from working with their customers and growing their business. They want to refocus their time building their businesses, and they want reliable partners who will address their specific needs. Our new OfficeMax Services Center builds on services we have always provided to give business owners a complete range of essential support, from credit card processing and payroll services to IT support and cloud storage solutions."
Business owners receive guidance from the OfficeMax Services Center staff to personalize their services and bundle services to increase value and savings.
"The introduction of the OfficeMax Services Center expands upon our services evolution. We’re pleased to have our store associates working in partnership with customers to assess customers’ business needs and connect them with the best solutions and services packages to streamline their support functions and, in turn, free up time to focus on business growth," to said Michael Lewis, OfficeMax EVP and president of retail.
Overstock.com opens warehouse in Pa. in time for holiday
Overstock.com has opened a distribution center in Jonestown, Pa., just in time for the holiday rush. The new operation means faster fulfillment of orders. Shipping products from the Jonestown facility will provide orders to customers from Maine to Florida within two days of order shipment.
"We are focused on the quick and efficient delivery of products to our customers at the best prices possible," said Overstock.com chairman and CEO, Patrick M. Byrne. "With the addition of this new Jonestown warehouse, Overstock.com can now provide even faster delivery to our eastern United States customers."
Initially, the Jonestown warehouse brings 15 jobs to the area with additional jobs forthcoming as operations scale throughout the next few years. Overstock.com’s primary warehouse will remain in Salt Lake City, Utah.
Shipping is free to all Overstock.com customers for orders of $50 or more. Shipping on orders under $50 is $2.95, regardless of how many items are ordered. Members of Club O, Overstock.com’s loyalty program, receive free shipping and at least 5% in reward dollars on all purchases, 15% in reward dollars on book purchases and 25%in reward dollars on select products. Club O memberships are available for $19.95 per year and are free to members of the United States Armed Forces.