Retailers scramble to generate holiday traffic: Dealers stock up on practical items, play down luxury goods this Christmas - Brief Article

Home Channel News, Nov 19, 2001 by Brae Canlen

NATIONAL REPORT -- When Connecticut hardware dealer Todd Rabin asks his customers, "What are you doing over the holidays?" he's making more than small

talk. Rabin is formulating a merchandising strategy that he hopes will result in a profitable Christmas season. And by the second week in November, Rabin reached some preliminary conclusions: People are staying home, so he needed to stock up on trim-a-tree inventory.

Retailers big and small are bracing themselves for a December like no other. A nationwide posture of fear and uncertainty are making it difficult to gauge consumer-spending habits. Industry soothsayers predict disappointing sales, but they say that every year. No one is expecting lavish purchases this season, but gift giving -- especially to loved ones -- may take on added importance. And home improvement stores are positioning themselves to get a piece of that Christmas pie.

Home Depot, which did some of its own consumer research this year, added an inexpensive line of small appliances in October.

"We're offering some exceptional price points," said Home Depot spokeswoman Mandy Holton. All appliances are manufactured by Hamilton Beach/Proctor Silex. The Atlanta-based retailer also decided to sell holiday decor this year: Light sets and large outdoor sculptures will accompany the fresh-cut Christmas trees that Home Depot traditionally offers.

Home Depot's poll of 1,002 households, conducted just as the United States began air strikes in Afghanistan, found that Americans were three times more likely to give "practical" items, such as tools and appliances. Only 23 percent of the respondents preferred giving luxury goods such as jewelry and clothes. By gender, 62 percent of the men surveyed said they would like to receive power tools, gas grills, woodworking and lawn equipment or small appliances this year. Among women, 48 percent wanted items such as new flooring, appliances and window coverings.

On average, respondents planned to spend an average of $580 on holiday gifts this year, according to the Harris Interactive survey. This amount matched or exceeded the amount spent last year by 76 percent of those polled.

Sears, another large retailer determined to try something different this season, is launching a joint venture with KB Toys. Chicago's State Street store was the first of 29 Sears units to make room for a 1,500-square-foot toy department stocked by the Pittsfield, Mass., toy retailer.

The Chicago location opened Sept. 14, with the remainder scheduled for Oct. 20. All are set to close in mid-January. "KB Toys at Sears" will occupy seasonal retail space in the Sears stores, which include 19 sites in Los Angeles, eight in Detroit and one in Mobile, Ala.

Smaller, independent retailers are also gearing up for the holidays with special sales, end caps and promotions aimed at holiday shoppers. Pacific Home Do it Centers, with two stores along the central California coast, will hold its annual "Customer Appreciation Night" during the first week of December. The catered event, which runs from 6:30 to 8:30 p.m., features costumed carolers, eggnog and wines from several local vintners. Store personnel dress up for the occasion.

"It turns into a social hour," said general manager Anthony Whalls, who sends out 12,000 invitations each year. Customers are enticed by a 20-percent discount on all merchandise -- including already reduced items advertised in an eight-page holiday circular. Whalls tailors the circular to the event and its particular clientele. His stores do more business in those two hours than on a busy Saturday in May, according to Whalls. "Even with the discounts, my margins stay above 20 percent," he adds.

James Cabirac, owner of Kief Hardware in Galliano, La., plans to turn all his end caps into gift displays. In his part of the South, desirable presents include hunting equipment, cast-iron pots for outdoor cooking and seasonal flags. "We also order a lot of chimeras, which we group together in the front of the store," said Cabirac. Then he runs a photo of the display in his local newspaper ads.

Todd Rabin, the Ridgefield, Conn., dealer who surveys customers on their travel plans, ordered more Christmas lights and small appliances -- in November. "I'm not buying inventory for an entire nation," he explains. "So we can react a little later." But Rabin has cut back on expensive gas grills and power tools. Like other retailers interviewed for this story, he foresees fewer big-ticket gift purchases this year.

Hoping to spur holiday sales, Ace Hardware is mounting its first-ever Day After Thanksgiving Day Sale. Almost 3,600 Ace retailers signed up to participate in the company's attempt to include hardware stores in the biggest shopping day of the year. The Oak Brook, 111.-based co-op held two seminars for retailers at its fall show in October detailing how to execute the event.

The main focus is to "get customers into Ace stores," says Lori Bossmann, vp-merchandising for Ace. "We're looking for a way for our retailers to band together, and the promotion is a way to do that. It's also, from a merchandising perspective, a way for us to get product in and out of our stores that's not part of their core merchandise assortment. Our retailers are allowing us to take the lead and really push something [new]."