‘Season of worry’ nears for retailers - East Valley Tribune: Business

‘Season of worry’ nears for retailers

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Posted: Friday, October 21, 2005 6:51 am | Updated: 8:08 am, Fri Oct 7, 2011.

A leading retail trade organization has dubbed November and December the "season of worry" for retailers hoping to shore up their bottom line for the year.

The International Council of Shopping Centers said in its official holiday forecast issued Thursday, "the worry is hinged on the degree of consumer financial stress at present and likely to persist during the season."

The retail group predicts a 3 percent to 3.5 percent increase compared with last year in holiday-related spending on everything from food and drink to party-wear, gifts, greeting cards and decor. That barely keeps overall spending ahead of population increases and inflation.

And it comes on top of a relatively dismal 2.3 percent increase from 2003 to 2004. Holiday spending increases for the last five years averaged only a 2.3 percent annual increase, the group contends.

The gift-giving portion of holiday spending has been trending downwards for even longer, according to research by the group.

Yet, the worry warnings bode well for discounters such as Wal-Mart and Target, as consumers demand more for their money, said Patrice Duker, spokeswoman for the shopping center organization.

That’s a new trend. Sales of luxury goods, which had been keeping overall retail numbers in the black for the last few years, are slowing, Duker said. And that slowdown in highend spending is likely to continue throughout the holiday season, she said.

The uneasiness already evident among the retailers, who make 25 percent to 40 percent of their sales during the annual November-December spending splurge, may be good news for shoppers.

"Retailers will have to be aggressive in price points and promotions, " Duker said.

Wal-Mart, which shunned early season discounting last year, has already said it will slash prices early and often.

The National Retail Federation, another major trade group, last month issued a much more optimistic prediction of a 5 percent boost in holiday spending.

Duker said the first real indicator will come during the first week of December. In the past, Thanksgiving weekend was looked at as a bellwether for the rest of the season. But in the last few years, big sales during the big-sale weekend brought out the bargain hunters, but that was followed by a drought of shoppers for a couple of weeks.

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