Insights

Holiday Season’s Impact on Retailers

BY CSA STAFF

By Ali Lipson, senior retail and apparel analyst, Mintel

As another holiday season is upon us, retailers are aiming to spread the cheer by opening stores on Thanksgiving Day and offering ‘sneak peeks’ of deals in advance of Black Friday. So, do consumers really want this? Well – it depends on who you ask. While some are excited about the possibility of shopping early (particularly as there are fewer days between Thanksgiving and Christmas this year), others feel that Thanksgiving is about tradition and family, a holiday that retailers should respect.

"Despite the varying opinions on the issue, major retailers including Target, Kohl’s, J.C. Penney, Macy’s, Best Buy, Walmart, Gap, Banana Republic and Old Navy are all planning to be open (at least some hours) on Thanksgiving. These retailers hope to get an edge over competition by drawing shoppers in before Black Friday. Some are even taking it a step further – Toys R Us has announced that it will offer special discounts beginning on Wednesday, Nov. 27. Amazon.com has a ‘Countdown to Black Friday Deals Week’ section on its site, offering different deals leading up to Black Friday beginning in mid-November. Barnes & Noble plans to get even further ahead by hosting ‘Discovery Friday’ on November, a week in advance of Black Friday. Stores will feature special events, promotions and assistance in choosing the perfect gifts.

"The ‘holiday creep’ is appearing among many retailers; however Hanukkah is early this year, beginning on Thanksgiving Day while there are six fewer days between Thanksgiving and Christmas compared to 2012, resulting in less shopping time. Consumer confidence is up which is likely to bode well for retailers this holiday season. However, consumers are savvier than ever when it comes to looking for deals. Access to smartphones and tablets has become the norm, and shoppers are using these devices not only for shopping, but for finding store locations, comparing prices, researching products and reading reviews. It is critical for retailers to consider how consumers are interacting with their mobile devices and how to get their attention through mobile.

"While retailers are pushing the early shopping with pre-Black Friday deals (in stores and online) and store hours on Thanksgiving, Cyber Monday and the following weeks in December are also important. As evidenced last year, many retailers continue to offer new and potentially better or more compelling offers throughout the season – encouraging incentives to continue shopping as well as and providing benefits for those who prefer to shop later.

"There will be no shortage of special deals and promotions this year; however there doesn’t seem to be one ‘hot’ item of the season. Electronics are likely to remain popular gifts, particularly with the introduction of the new iPad Air, the PlayStation 4 and Xbox One. Gift cards are also likely to be popular gifts, which can benefit retailers as it will encourage post-holiday shopping as consumers visit stores/websites to redeem gift cards.

"A major announcement from Amazon indicates that the company has partnered with the US Postal Service to offer Sunday delivery in select markets, just in time for the holiday season. This gives them an even greater competitive edge over others, and other retailers need to ensure that shipping rates are low or free and that delivery times are minimal.

"Regardless of how much consumers are spending or what items are on their ‘most wanted’ lists, there will be no shortage of promotions and incentives this season, creating a great deal of choice for today’s consumers."

Mintel is a leading global supplier of consumer, product and media intelligence, providing insight into key worldwide trends.


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News

PetSmart adds director of Herman Miller Foundation to board

BY CSA STAFF

PetSmart has unanimously elected Elizabeth Nickels to fill a newly created vacancy on its board of directors. Nickels will join the 2013 class of directors, and will be eligible for re-election by the company’s stockholders at the 2014 annual meeting of stockholders.

Nickels is currently the executive director of the Herman Miller Foundation and has held several executive positions with the organization for the past 12 years, including president of Herman Miller Healthcare and CFO. She is also presently a board member of Spartan Stores. Prior to joining the Herman Miller Foundation, Nickels served as the VP and CFO of Universal Forest Products for seven years.

“Elizabeth Nickels brings a great deal of corporate knowledge and experience,” said David Lenhardt, CEO of PetSmart. “We welcome Ms. Nickels to the board and look forward to working with her.”

PetSmart operates more than 1,301 pet stores in the United States, Canada and Puerto Rico, and more than 196 in-store PetSmart PetsHotel dog and cat boarding facilities.

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FINANCE

J.C. Penney Q3 loss widens; encouraged by positive signs

BY Marianne Wilson

Plano, Texas — J.C. Penney posted a bigger-than-expected loss for its third quarter. But the struggling retailer pointed to hopeful signs that its business is starting to stabilize as its heads into the holiday season.

Penney reported a loss of $489 million in the three months ended Nov.2, compared with a loss of $123 million in the year ago period.

Sales fell 5.1% to $2.78 billion. Same-store sales were down 4.8%, but the period ended with its first monthly gain since December 2011. And online sales rose 24.5%, to $266 million.

“We are proud of the company’s October sales performance, encouraged by the early weeks of November,” Myron E. Ullman III, the company’s chief executive, said in a statement.

In a statement released Wednesday, Penney CEO Myron Ullman said that he is "encouraged" by sales in the early weeks of November, and the company believes it is “making strides” toward a path to long-term profitable growth

"Our strategies to reconnect with customers are beginning to take hold, and this became increasingly clear as the quarter progressed," Ullman stated.

In an encouraging sign, Penney said that gross profit margin improved to 29.5% in the quarter, compared with 32.5% last year.

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