Sporting goods, jewelry, music top holiday hot list - 1996

Discount Store News, Nov 18, 1996

Nationwide DSN report - Head become tails this year, as computer and consumer electronics retailers, the stars of the past three Holidays, go into a fourth quarter tailspin, while rallying department stores look solid in the period. Discount stores, while losing a bit of ground, remain the dominant shopping choice for Christmas 1996. Overall, retailers should see a sales increase of about 6%.

That's the top line from two October consumer surveys, one conducted by the International Mass Retail Association and Gallup and the other by the National Retail Federation and Deloitte & Touche.

In both studies, discounters dipped slightly as a planned gift destination, from 79% of consumers to 76% in the Gallup/IMRA study, and from 64% to 60% in the NRF/Deloitte sample. Fewer consumers told Deloitte that discount stores would be the place where they spent the most, with the response dipping to 35% from 42%. However, Deloitte's Irwin Cohen noted that those figures were impacted by the inclusion, for the first time, of "superstores" as a shopping option. "Some of those shoppers probably think of discount stores as superstores," he said.

Discounters declined somewhat, with department stores, catalogers, specialty stores and clubs rising modestly in the estimation of consumers. Department stores, with a 9% increase in the Deloitte study and a 3% gain in the Gallup poll, appeared to be the big winners this year.

Consumers reported plans to spend more - maybe a lot more - this year than last. IMRA's study showed the dollar figure lea In to a record $806 from a very low $655 a year ago. The NRF study showed a modest 12% jump, from $685 a year ago to $764.

Consumers were clearly more bullish than retailers in nearly every area, except computers. Retailers still expect a strong, if subdued, market in computer hardware; Deloitte found that "the consumer is much less confident than the retailer."

What's going to be hot this year? Compared to years past, the list is filled with surprises. Sporting goods, flat for years, should show near-record strength, with exercise equipment leading the way, along with indoor sports equipment like table tennis sets and dart boards. Fine gold jewelry is also expected to jump considerably, as the luxury goods boom of last Holiday filters down to the middle class. Music, which has been suffering for the past 24 months, should also get healthy this Christmas, assuming that desirable new titles reach the market in time.

Apparel, the whipping boy of the past few Holidays, should show a significant increase, both studies showed. Americans have put off significant apparel purchases for three years now, and their closets are full of out-of-date selections. In the Gallup poll, 30% of consumers said they planned to spend more on casual clothes, 19% will spend more on dress clothes, and 17% will spend more on outerwear. The casual figure, combined with only 12% planning to spend less, made casual clothes the largest gainer by far in buying intentions. Most other categories were in negative numbers.

The major losers were computers (-33%), home furnishings (-29%) and small household and kitchen appliances (-28%), according to the Gallup/IMRA study. Deloitte reported similar results.

The perennial toys category should perform well, although there are no true "gotta haves" this Christmas. Licenses like 101 Dalmatians and Space Jam are expected to be strong storewide, according to Kmart's Ronald Hudgens, divisional vp for visual merchandising, and the Gallup Poll found that basics - plush, dolls and construction toys - will be popular. Consumers plan to spend slightly more on toys this year.

Overall, consumers on the West Coast, particularly Californians, were the most optimistic about Christmas. Deloitte's Cohen said the raw numbers of expected spending increases were so enthusiastic (in the 30% range) that he was forced to unilaterally modify them.

However, the Gallup study found just the opposite; West Coast consumers plan to spend less than two-thirds as much as Northeastern respondents.

CE looks to be a disappointing area, but there are bright spots. Gallup found that convergence products like the Magnavox WebTV should be hot, and that DSS will have another great year. Computer software should perform well, as will peripherals.

The term most observers are using is "guarded optimism." Deloitte's Cohen noted consumers seem to be in a buying mood, while retailers have tightened inventory considerably since last year, meaning that he expects the markdown frenzy of '95 to be less of a problem this year.

But Ames chairman and IMRA president Joe Ettore said that he expects the promotional environment to be about the same as it was a year ago.

Authors of both studies indicated that the relatively healthy job environment, rising wages, an increase in the minimum wage and other social conditions have given rise to a more optimistic consumer.

It would take a major disaster, like the Gulf War or massive oil price increases to spike the consumer's relative cheerfulness, Deloitte's Cohen said.