Christmas in September?
Each year, since the “big recession,” retailers have been putting out their holiday decorations and starting their promotional sales as early as mid-October. It used to be that Black Friday was the kick-off that got everyone out to the stores in search of that must-have discounted gift for their loved ones. This year, however, the calendar barely hit September and I saw Christmas trees on display at my local Costco and retailers announcing their layaway program incentives.
Toys “R” Us seemed to be out ahead of their competitors this year when they announced they would be waiving the service fee and minimum purchase requirements for their layaway program (for anything put on layaway before Halloween). Walmart followed almost immediately with an announcement that they would be cutting their up-front service fee from $15 to $5, and, following suit just days later, Sears and Kmart announced they would be waiving holiday-season layaway fees altogether (until Nov. 17). While the specific terms of each of these layaway promotions vary, the mere fact that they have been announced — and announced so early on — is, to me, an indication that retailers will once again be aggressive in their efforts to win the limited dollars of consumers this season. And, it shows they are proactively trying to spur brick and mortar sales as soon as possible, extending what has long been the “traditional” holiday shopping season.
While the retail economy is nothing like it was a few years ago — sales have been quite good since July, and back-to-school numbers were particularly strong — it is far from robust. It would seem likely that these layaway programs will spur some additional sales from savvy, deal-hungry shoppers, but will it be enough? The administrative costs associated with layaway programs are actually quite large, and margins are pretty slim, so I’m not sure retailers will gain that much ground. However, I do think it could lead to a significant boost in brick-and-mortar sales, which in turn, has an impact on expansion plans for next year. Really though, I think that these early promotions are more about marketing and messaging than anything else — about getting the message out there that holiday shopping is here and “flipping the switch” in shoppers’ minds. If these announcements do nothing more than just get people thinking about their holiday shopping, then I think they have been successful. It worked on me: I’m already writing about holiday shopping!
What do you think? Are consumers likely to start their holiday shopping early because retailers are providing them with incentives? Will retailers see the results in sales and be bullish on their expansion plans? Have you started your holiday shopping yet?
Please make a public comment below or feel free to e-mail me privately at [email protected].
Click here for past columns by Jeff Green.
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Holiday sales to grow as much as 4%
Deloitte is forecasting holiday sales will increase between 3.5% and 4% as the economy’s health and the presidential election take center stage among consumers this fall.
Despite some distractions this year, retailers should expect a modest increase in 2012 holiday sales, according to Deloitte’s annual holiday forecast release Tuesday morning.
"Economic headwinds nagging consumers this fall include stubbornly high gasoline prices that continue to creep up and soft housing and job markets," said Carl Steidtmann, Deloitte’s chief economist. "While consumers turned out in the summer to give retailers solid gains for a few months, that pace may be difficult to sustain through the end of the year. Consumers and businesses alike may pause in advance of the election; however, retailers may benefit from a post-election consumer spending boost."
Deloitte’s retail and distribution practice expects total holiday sales to climb to between $920 and $925 billion, representing a 3.5% to 4% increase in November through January holiday sales when compared to last year. While that is a respectable increase, it is below last year’s growth rate of 5.9%.
Additionally, Deloitte forecasts a 15% to 17% percent increase in non-store sales, which is primarily attributable to ecommerce. Nearly three-quarters of non-store sales result from the online channel with additional sales coming from catalogs and interactive TV.
"Non-store sales continue to outpace overall growth, but increasingly influence consumers’ experience with the retail store, from trip planning, to in-store product research, and post-purchase reviews and sharing," said Alison Paul, vice chairman, Deloitte LLP and retail & distribution sector leader. "This holiday season, retailers’ most lucrative customers may be the ones they engage across physical and virtual storefronts."
Paul noted that consumers might also consolidate or reduce trips to the store in response to higher gas prices. Conversely, she added, consumers are expected to keep a sharp eye on promotions and pricing, making retailers’ digital connections with consumers before and during each shopping trip even more critical this year.
"This year, we anticipate retailers will come to the starting gate with true omni-channel pricing strategies, as opposed to disparate or reactionary strategies of the past," said Paul. "Consumers should see more price transparency across mobile, online and store channels, and retailers will use these same channels to gain insights into their core customers’ behavior. Retailers that interpret and respond to real-time information about shoppers can hit the right notes on pricing and promotions that drive traffic without eroding margins."
Deloitte forecasts that mobile-influenced retail store sales will account for 5.1 percent, or $36 billion, in retail store sales this year as consumers increase store-related smartphone activity such as product research, price comparison or mobile application use.
"Retailers that welcome the smartphone shopper in their stores with mobile applications and wi-fi access, rather than fear the showrooming effect, can be better positioned to accelerate their in-store sales this holiday season," said Paul.
The firm’s recent research shows shoppers armed with smartphones are 14% more likely to make a purchase in the store than those who do not use a smartphone as part of their in-store journey.
"The mobile channel is a powerful customer engagement tool, enabling retailers to capture a shopper’s attention at the point-of-purchase, while gleaning valuable information about shopper behavior regardless of the shopper’s location," Paul said.
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McCormick adds Lilly exec to board
Global flavorings leader McCormick & Company named Eli Lilly & Company executive Jacques Tapiero to its board.
Tapiero has served as SVP and president of emerging markets for Lilly since 2009 and brings more than 25 years of international business experience to the $3.5 billion spice company. Tapiero currently leads Lilly’s business strategy in many of the world’s fastest-growing markets, such as China, Russia, Brazil, Mexico, South Korea and Turkey. He is a member of Lilly’s executive committee.
Previously, Tapiero served as president of the intercontinental region for Lilly, which comprised offices in Asia, Australia, African and Middle East countries, Canada, Latin America and Russia. Prior to this role, Mr. Tapiero has served as president and general manager for both Lilly France and Lilly Brazil, as well as managing director of Lilly Sweden. He has held several sales and finance positions in Indianapolis, France, Sweden and Switzerland since joining Lilly in 1983.
"We are extremely pleased to have Mr. Tapiero join our board. His broad business experience and extensive global background will bring our board meaningful insight and expertise as we continue the global growth of our business," said Alan D. Wilson, chairman, president and CEO of McCormick.
Tapiero was born in Morocco and is a Swiss citizen. He obtained MBA degrees from the Ecole Superieure de Commerce at Clermond Ferrand in France and from the American Graduate School of International Management, Glendale, Arizona.
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