Retailers are anxious to find out if holiday shopping will be naughty or nice

After last year’s precipitous dip in holiday sales, the largest decline in 40 years, some retailers were thinking of “Black Friday” as “Judgment Day”. The day after Thanksgiving has become the single busiest shopping day of the holiday season, because stores open for extended hours, and offer special financing options, free gifts, and steep discounts on many items, from Christmas ornaments to flat-screen TVs. Data released on the Saturday after Thanksgiving by ShopperTrak, which follows sales and customer traffic at more than 50,000 stores nationwide, showed that sales rose a mere 0.5 percent on the annual kickoff to the holiday shopping season. Concerns over health rather than wealth may have been a factor. Nearly one in five consumers reported that because of their concern over swine flu, they plan to avoid shopping on traditionally busy retail days during the holiday season, according to a recent Morpace Omnibus Study. One hundred million Americans were expected to shop online on “Cyber Monday,” November 30, when online stores had their equivalent of “Black Friday”. Holiday sales, both in-store and online, are expected to grow at their slowest pace in six years as shoppers worry about jobs, the housing and stock markets, and higher food prices, according to the National Retail Federation. Being a very unusual holiday season, economists may not get a clear picture of consumer trends until they look under the Christmas tree. “I think the holiday season is going to be tough for many small retailers, because people are concerned about their money, and rightfully so,” said Al Abruzzo, president of Mike’s Video in State College. The company, which is celebrating its 25th year in business, sells video equipment, TVs, and major appliances, with appliances being the majority of its sales. Mike’s also has a video store in Bellefonte. Retailers have differed in their approach to advertising during the recession, but most blitz the media during the holidays. “We advertise in the newspaper, but we get most of our business by word of mouth,” said Abruzzo. “We also do a lot of charity work, for example, if you go to the Little League field in State College, you won’t find a Best Buy name on a team shirt, but almost every local merchant sponsors a Little League team or the YMCA or other local organizations, because we all belong to the same community. “So rather than throwing my advertising dollars away on TV and radio spots, I’m going to support the community, and people will remember that.” Abruzzo is upbeat about his store’s sales for this holiday season. “If you spend $1,000 on an item, you want the store you bought it from to stand behind it, because a $1,000 means more to consumers this year than it did last year. “That’s why we’ll do fine, because we’re service oriented,” he said. “We’re not just another ‘big box’ selling items we don’t personally guarantee, but times being tough, we also have to make sure we’re competitively priced.” When the recession hit, retailers who sold big ticket luxury items were the first to feel the pain. Since fine jewelry is pricey inventory that moves slowly even in the best of times, many stores are in debt, and about 1,500 jewelry stores have gone out of business. Twenty percent more American jewelers have gone out of business this year than last year, according to the Jewelry Industry Research Institute. The Zale Corporation, a large jeweler headquartered in Texas, which operates 120 stores in Pennsylvania under three brand names – Zales, Gordon’s, and Piercing Pagoda – closed 105 stores last year. “We are coming off a holiday that was very challenging last year and a pretty tough start to 2009, but we’ve seen things start to stabilize, chiefly because we’ve made improvements in our business in terms of our merchandise and marketing,” said David Sternblitz, VP and Treasurer of Zale Corporation. The company increased its own label proprietary collections, which distinguishes it from competitors. One of Zale Corp’s best sellers is the shared heart collection, which is a heart within a heart design used in its pendants, earrings, rings, and bracelets. Like many retailers, Zale has seen its customers downscale their purchase tickets, at least in the company’s fashion jewelry lines. “In bridal diamonds, we haven’t seen any trade down in our average ticket,” said Sternblitz. “If you’re getting engaged, you’re going to spend a little more to guarantee a ‘yes.’” Most Zale customers are male, said Sternblitz, although they often get ‘hints’ from their wives and girlfriends. “In what’s been a tough environment for a number of years for the jewelry industry, we still have the liquidity to leverage our scale and spend a significant amount on advertising to drive consumers into our doors,” said Sternblitz. “We are cautiously optimistic that this holiday is going to be much better for us than last year.”