Holiday sales will impact 2004 - Editorial

DSN Retailing Today, Oct 27, 2003 by Tony Lisanti

The prognostications for holiday sales and what consumers will spend over the next eight weeks are being made and garnering as much publicity as oddsmakers setting the stage for the World Series.

Based on strong retail sales in September, the early belief is that holiday 2003 will be strong, with sales expected to increase from 5.7% to 7% over last year, according to surveys conducted by the National Retail Federation and Deloitte & Touche. However, such factors as a drop in consumer confidence and high consumer debt have caused some concerns over the bullish projections.

Certainly, the results of Black Friday and the Thanksgiving weekend will have analysts adjusting their predictions and retailers altering last minute plans.

But there's more to holiday sales than just the total projections or how much money consumers will spend versus 2002.

There's a subplot to all the numbers and it has to do with the performance of several key retailers that are recognized as market drivers or trendsetters. What occurs during holiday season for these retailers will impact the following year not only for the specific companies, but for the industry as well.

Following a disappointing holiday season last year, Toys "R" Us is extremely bullish this year and, in fact, spent an entire year planning for Holiday 2003. In the final stages of implementing its turnaround strategies since the beginning of the decade, TRU is ready for an explosive season and 2004. Another difficult holiday season will certainly impact the company in the short term and likely affect its overall strategies for 2004. In addition, category sales will indicate emerging trends and fading trends, thereby causing strategic shifts throughout the industry.

Monitoring Wal-Mart will also provide an early glimpse of just how dominant the discounter will be this holiday. The stronger Wal-Mart's sales are, the more difficult a season it will be for competitors. Conversely, if Wal-Mart experiences softer sales, it could signal an overall slowdown in consumer spending. And, in turn, Wal-Mart's results will also impact retail strategies next year.

Similarly, keeping a close watch on Amazon's early results will also reveal the dot-com's ability to leverage its core categories and joint ventures with TRU, Target and other retailers. Amazon's performance will also indicate whether e-commerce will continue to grow, as predicted by Deloitte & Touche and other analysts.

The bellwether for the department stores is still Federated, and the early results of the retailer will indicate if consumers are purchasing more or pulling back this year on basic apparel. Any early slowdowns will also turn it into a season of markdowns, which will be a boon fox" consumers, but a challenge for major apparel retailers heading into 2004.

And then there's the Kmart factor. 'Tis truly a benchmark season for this discounter, which merged from bankruptcy earlier this year with new financing, new strategies and a new advertising and image campaign that proclaims "Kmart. Right Here. Right Now." If Kmart struggles this holiday season, it will trigger another round of negative publicity not only for the discounter, but also for other retailers, which are hoping to rebound in the fourth quarter and set the tone for 2004.

So it's obvious that there's much more to the holiday season--as there is to the World Series--than just the numbers and predictions. It's all the subplots, or locker room stories, that not only make it interesting, but set the tone for the year ahead as well.