Woman’s Wear Daily

Holiday Survey: Shopping Early and On the Cheap?

by Evan Clark

Retailers are squaring off with both their consumers and their landlords this holiday season, and so far they’re winning only half the battle.

A new survey from Accenture showed that, even though more shoppers might come out on Black Friday, consumers generally plan to make gift purchases early this year with a focus on discounted goods. And the Federal Reserve’s Beige Book showed consumer spending was weak in most of the country in September and early October.
Already, projections place holiday sales at about even with last year’s dismal take and well below 2007 levels. Meanwhile, stressed-out stores are asking for deals from their landlords and getting them.
Accenture, which surveyed 526 consumers last month, found that 69 percent expect to do the bulk of their holiday shopping by Dec. 7, up from 60 percent last year.

Fifty-two percent plan to shop on Black Friday, up from 42 percent last year, but 86 percent of consumers said they would not be moved to buy this holiday season unless goods were marked down by at least 20 percent.

“We have seen a ‘shift to thrift’ across all income levels during this economic downturn and breaking that habit will be the greatest challenge for retailers this holiday season,” said Janet Hoffman, managing director of Accenture’s retail practice.

Accenture said apparel made it onto 56 percent of shopping lists.

For at least this holiday season, Wall Street seems content with the weak sales projections since stores have cut costs enough to shore up bottom lines. Stocks rose early Wednesday, but a late-afternoon sell-off pushed the S&P Retail Index down 1.9 percent, or 7.59 points, to 383.27. The Dow Jones Industrial Average surrendered the 10,000 mark, dipping 0.9 percent, or 92.12 points, to 9,949.36.

As stores trumpet cost cuts, tight inventories and gross margin expansion to analysts, they’re crying poor to their landlords and demanding lower rents.

U.S. retail vacancy rates rose to 10.3 percent in the third quarter from 10 percent in the second quarter as rents fell 0.3 percent, according to real estate information company Reis Inc.

“The rent declines observed over the past year have brought rents back down to the levels of those achieved two or three years ago,” said Ryan Severino, Reis economist.

The number of leases being signed began to decline about a year ago as the financial crisis roiled, said Steven Greenberg, founder and president of retail real estate advisory firm The Greenberg Group Inc.

“You were able to count on the Gap and Chico’s, on people like Ann Taylor to do 50 or 100 transactions a year,” he said, noting those days are now gone.

A few chains are beginning to make their strategic moves, positioning themselves for growth when the market rebounds.

“Those retailers that are very well-financed and can weather the storm for the next year or so can take advantage of some really spectacular lease transactions,” Greenberg said.

The Fed’s Beige Book, based on anecdotal reports from around the country, did turn up some signs of improvement in consumer spending, but the overall trend showed weakness.

Chicago contacts said consumer spending continued to fall, but noted the rate of decline had slowed. Richmond retailers reported flat or declining sales. Sales in Dallas remained unchanged, but observers noted an unexpected weakening of sales at value-based retailers.

Retailers in Philadelphia reported steady sales in September, although they were below year-ago figures. There was also a pick-up in back-to-school shopping. In the district, the report said, “Some apparel specialty stores reported that sales picked up better than expected for the fall shopping period, but on balance area retailers indicated that the sales rate has not fundamentally improved compared with the summer months.”

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