Early Returns Positive On ‘05 Holiday Sales

NEW YORK— Early and aggressive holiday advertising by retailers jump-started a holiday shopping season that by many accounts met or exceeded expectations, which had been tempered by the potential impact of rising energy costs and consumer debt on gift spending. Retail analysts and pundits expected at least a 6% year-over-year increase in holiday retail sales, fueled by such coveted big-ticket electronics as wide-screen televisions, the XBOX 360 video game system and Apple iPod MP3 players. Some observers said a relative dearth of must-have new items compared of previous years, though, might have swung the gift-giving pendulum to the more practical side for many consumers. That, in turn, might have helped lift sales of select housewares categories during the season. Several housewares vendors reported solid, year-over-year gains during the fourth quarter. Among the top retail performers in housewares were core categories such as slow cookers and stainless steel cookware, and specialty items such as single-serve coffeemakers and santoku knives. Gift cards continued their rise in popularity this holiday season (actual housewares sales for the season could come in a bit higher as gift cards are redeemed). The Internet, meanwhile, further asserted itself as a primary shopping resource for time-strapped and mall-averse shoppers during the holidays, posting double-digit gains, according to some followers. Scott Krugman, a spokesperson for the National Retail Federation, said he was optimistic that NRF’s holiday sales forecast of a 6% increase would be met. He said retailers in November posted a year-over-year gain of 7.4%, generating a lot of momentum heading into the December rush. The big winners for the holiday, according to Krugman, were discounters, big-box electronic stores and high-end luxury retailers. He noted that retailers at the low-end and high-end of the price spectrum each have had a strong holiday selling season. “We have been calling this the “high gas price squeeze,” he said. “The luxury customer is not as impacted by gas prices and has continued his/her normal shopping patterns. However, those that have felt the squeeze from gas prices have become more aggressive in looking for lower prices.” On the impact of Internet sales, Krugman said the NRF expected web-based sales to post double-digit increases. However, he noted, on-line sales still account for just about 5% of total retail sales. Krugman added that retailers with brick-and-mortar stores and websites aggressively used multi-channel marketing during the holidays. Anne Brouwer, senior partner for the Chicago-based retail consulting firm McMillan Doolittle LLP, credited strong end-of November sales to early and aggressive promotions by big retailers, most notably Wal-Mart. “Last year (in 2004) Wal-Mart was not particularly aggressive in terms of price reductions and loss leaders for Thanksgiving weekend, and they had their hat handed to them in ’04,“ Brouwer said. “So immediately after last year’s holiday period, Wal-Mart started to re-strategize this year’s holiday period. They came out with extremely aggressive pricing on things like computers and DVD players.” Brouwer said lingering consumer concerns about rising fuel prices, mortgages and personal debt— which may have abated a bit during a generally decent holiday period— could once again swell to dampen retail spending early in the new year. She also noted the emerging trend by consumers of foregoing traditional merchandise gifts in favor of alternative indulgences, such as vacations, home improvement projects and entertainment “This has been gaining steam steadily for a number of years and could continue to grow in a retail climate without a must-have-product atmosphere,” Brouwer said. Nonetheless, housewares produced some apparent must-haves during the 2005 holiday season. “The home was a focal point of gift-giving in calendar-year 2005,” said Peter Greene, president of NPD Houseworld, the housewares and home goods market research unit of NPD Group. Greene pointed out that that while November sales for the combined housewares categories and channels tracked through POS by NPD were up just 2% year-over-year, the month-long period through Black Friday had its share of hot categories. Among the double-digit dollar small appliance gainers in November, according to NPD’s Greene, were single-serve coffeemakers, food processors (led by the informercial-driven Magic Bullet and other compact processors), toaster ovens (driven by several new, upgraded models), rice cookers and slow cookers. In kitchenware, 8-piece stainless steel cookware sets (a triple-digit gainer), bakeware (propelled by a 28% year-over-year gain in silicone bakeware) and santoku-style knives were among the top year-over-year performers in November, according to NPD. Several housewares vendors concurred with reports of solid holiday sales: • Sam Weiner, president of Edge Craft, supplier of upscale ChefsCraft electrics, including knife sharpeners and food slicers: “From our perspective this year’s holiday sales have been solid, with solid increases compared to last year.” • Gregg Bond, a partner with Helman Group, which supplies specialty electrics such as Nostalgia popcorn makers, hot dog roller-style cookers and chocolate fountains: “Holiday sales so far are excellent. Our products are selling on pace with what we and our retailers forecasted, and some products are doing better than the forecasts.” • Allan Wolk, vp/sales and marketing at upscale cookware supplier Swiss Diamond: “Christmas sales for us at least doubled from last year. Retail sales are mixed. Some appear to be slightly down others are up. It depends on how aggressive they are. Our audience is gourmet, specialty retailers. We received orders as late as the beginning of (the second week of December) from some of our regular customers. For some of our Internet customers we were drop shipping (orders) and we’ve seen a big spike in that segment.” • Les Koenig, president of kitchenware supplier Creative Home: “It’s been better than we thought, but it’s come late. Ordinarily, October is a much bigger shipping month than November and December, but this year that’s been the reverse. My sense is that retailers were playing it close to the vest and at some point they said, ‘We need goods.’ Sales appear to be ahead of last year, and it appears retailers have been able to hold margins and avoid major discounting.” • Kariona Lam, sales manager at tabletop supplier CCA International: “We are seeing that sales for the holiday and fourth quarter improved a bit from prior years— not a giant leap, but it is better.” • Riki Kane, president of barware and kitchenware supplier Metrokane: “[The holiday season has been] excellent— we’ve had nothing but reorders. From our point of view it’s really a hot Christmas season— very strong.” Peter Giannetti, Ed Lieber, Greg Sleter and Cynthia Ward Vesey contributed to this story.