There may be some holiday cheer after all this season, as some retailers and analysts have seen some signs of life at the checkout. Pulling out all the stops, large retailers are upping the ante with aggressive cross-channel marketing and promotion strategies, offering online add-ons and price collections, in an effort to grab sales and market share during the critical stretch run.
After slumping a bit in the early part of the year e-commerce sales are expected to be a big driver during the holidays, and many major retailers are stepping up their e-marketing as a result. According to the latest projections from Forrester Research, US online sales are expected to rise 8% this holiday season, with mass market retailers who can offer discounts expected to perform best. The research firm said on Monday it expects online retail sales in November and December to reach $44.7 billion this year, up from $41.4 billion a year ago, providing a bright spot to a retail industry.
“We noticed sluggish growth rates in online retail sales between 2007 and the first half of 2009, some of it correlated to the economy,” says Richard Hastings, Global Consumer Strategist, Global Hunter Securities, LLC. “More recently, we are seeing outsized growth rates in online sales at many major retailers, including Abercrombie & Fitch and at Macy’s, among others. Based on this ground-level view of solid evidence, and the big increases in traffic to home furnishings Web sites during August and especially September, we believe Forrester’s forecast for 8% growth is probably close to correct.”
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Retailers Step Outside the Gift Box
Tapping into the bright spot of spending, Kohl’s anticipates a 30% increase in online sales this year, as the company is ramping up its online efforts to nurture the cost-conscious consumer.
The company is planning to update its Facebook page—which has 700,000 fans—with holiday campaign offers, and new functionality added to its e-mail promotions that enable recipients to post sales offers to their Facebook pages.
The newly launched gift finder tool on Kohls.com is designed to help shoppers find gift ideas searching by price points and recipient category. Also new this year, shoppers can create a “holiday hint list” using the site’s gift registry.
Leveraging its email database, which the company said has increased 50% this past year, Kohl’s is planning to send 17 separate e-mail campaigns in November and 30 more throughout December with its holiday promotions.
JC Penney is optimistic about the consumer mindset, indicating that customers will “give like Santa, save like Scrooge,” in a recent press announcement. The department store chain is offering online extras like Black Friday deals, gifts for $25 or less and a shopping blog. JCPenney is also taking its gift selection higher with its “red box gifts” collection of unique items.
Special “red box gifts” Associates, selected based on their excellence in customer service and executing the Company’s CustomerFIRST program, will also be on hand to help customers find the perfect gift.
Pressure & Price Points
“Pricing and quantity were chaotic during the fall and holiday seasons last year, as conditions deteriorated at an unusually fast pace,” says Hastings. “Since that time, the entire consumer goods industry has reached deeper into technology and resources to figure out a new equilibrium for quantity and price and promotion.”
Hastings says inventories are relatively lean at some stores this year, but “behind that scenery is a deeper richness of, and a faster responsiveness regarding inventory, largely because the industry is truly multi-channel now.”
Hastings says pricing and promotion are largely structured around loyalty, multi-channel and markup optimization, rather than the older paradigm of markdown optimization, outsourcing, and using supply chains to discover cost savings. “The retailing industry, generally speaking, has rapidly moved into a tech-centric state during 2009,” he say
Best Buy is emphasizing connectivity products and providing customers with the best prices. CEO Brian Dunn was optimistic during a recent investor call, indicating the chain continues to gain share and he has high hopes for the holiday selling season.
The company emphasizes its service offerings, like the capabilities of the Geek Squad and its Best Buy Mobile stores to make sure consumers can understand and enjoy their products. During the call, Dunn said market share is up but “we are not driving that by price points. You have to be able to provide selection, install [products] and be priced right.” Dunn said Circuit City’s departure “put a lot of customers in play” for Best Buy as the company did gain share, however, Dunn is still aware of its competitors—“any business that goes after discretionary income.”
Wal-Mart is getting aggressive reducing prices on more than 100 additional toys through Christmas, in addition to highly anticipated DVD titles at $10. The company reported a 3.2% increase in earnings for its fiscal third quarter, which President & Chief Executive Mike Duke attributes to improved productivity and inventory management. Duke said Wal-Mart is gaining market share “all over the world” during a recorded call.
Hastings says Amazon.com is expected to continue sales leadership, due to the total experience and its superior technology edge, and the scale of the business.
“In consumer electronics, we expect Wal-mart will move deeper into the moderately and lower-than-moderately priced market in entertainment and consumer tech, putting pressure on Best Buy during the holiday season,” he says. “In apparel, we see a modest rebound in sales at Abercrombie & Fitch, especially as colder weather sets in during late December, and we expect casual contemporary apparel to maintain positive sales growth at Buckle and Aeropostale.”
Hastings says the footwear sector has been and should continue to perform well, offering department stores a traffic boost. “Overall, we are looking for a 2.5% increase in sales for the 3-month holiday season, November-December-January, with colder weather in January boosting store-based traffic for apparel and gift card redemptions at teen apparel specialty stores,” Hastings says.
