Cheery News for Holiday Shoppers

Smart Buying

Cheery News for Holiday Shoppers

Price-cutting is still in fashion, and seasonal hiring will increase.

It's shaping up to be a little cheerier this holiday season than last, with a bit more glee in store for shoppers than for retailers. Fourth-quarter retail sales are expected to be up 2.5% this year compared with the same period in 2009, says Kantar Retail, a consulting firm. That's a modest increase compared with long-term average revenue gains of 4.5% to 5.5%. But it's something. Sales were flat last year and down nearly 5% in 2008. Fourth-quarter sales would be stronger if it weren't for stimulus-inspired spending earlier -- remember those "Christmas in July" sales at Sears, Target and Toys "R" Us?

The view from the other side of the cash register is better. Price competition is cutthroat as retailers battle for dollars that recession-scarred consumers are still reluctant to part with. "This is a great time to be a shopper," says Kantar economist Frank Badillo.

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Holiday sales matter. The take for retailers in November and December represents one-fifth of total industry sales, on average, according to the National Retail Federation -- nearly 30% for jewelers and close to 25% for department stores. And because consumer spending accounts for roughly 70% of gross domestic product, retail sales are a barometer of our fiscal well-being.

The holiday outlook is buoyant enough to support the hiring of a sizable number of elves this year. Outplacement firm Challenger, Gray & Christmas sees 500,000 to 600,000 seasonal retail jobs. Toys "R" Us says it will hire 45,000 workers to staff "pop-up" stores -- temporary emporiums that operate in otherwise empty storefronts.


Surveys show that frugality is still very much in fashion. The vast majority (93%) of consumers surveyed by consulting firm Accenture said they're looking for sales or discounts. And they'll likely find some. Aggressive price-cutting at Wal-Mart is forcing other discounters to follow suit, causing a downward price spiral as the holidays approach, says Badillo. Meanwhile, apparel stores, after having plumped up inventories earlier in the year, are facing more competition from department stores. The result: Prices have been falling since spring, and could slip another 1% over the holidays compared with 1% price hikes a year ago.

You may not find the deals you did last year in consumer electronics. Discounting has eased this year, and demand for gadgetry remains strong. Despite a run-up in gold prices, jewelry prices are stable.

Online shopping is a bright spot for retailers and customers. Non-store sales (two-thirds online) will increase 15% this year, forecasts Deloitte, a consulting firm. For consumers, going online is as much about comparison shopping as it is about buying. One-third of shoppers will compare prices online before a trip to the store, while one in 20 will bypass the store altogether, says Kantar. Google research shows that 22% of smart-phone owners use their devices to compare prices. Retailers are recognizing -- and embracing -- tech-savvy, mobile shoppers. Sam's Club, for instance, is installing Wi-Fi in its U.S. locations -- giving shoppers a more modern way to let their fingers do the walking (for more shopping tips and traps, see Lowdown).