Small brick-and-mortar shops that rely on seasonal sales are seeking creative ways to avoid last year's bloodbath of discounting, as cash-strapped consumers are expected to gravitate toward big-box and discount retailers.
Toy and gift shop Groovy dc rolled out its holiday merchandise in early October—a full month earlier than usual—advertising chess sets and custom chess pieces. "Because of the economy we said, let's get the inventory out while there's money available," says co-owner Manuel Cortes, who says holiday sales account for upward of 25% of the Washington, D.C., store's annual revenue. "It's a way of enticing and saying 'hey, come and get it,'" he adds.
Wonder Works, a specialty toy store with two locations in Charleston and Mount Pleasant, S.C., set up its Christmas windows in mid-September, a month and half earlier than usual, and began offering layaway weeks earlier than usual. Owner Christine Osborne says 45% of business comes between October and the end of the year. Her strategy seems to be already working—September sales at the toy stores were up 8.5% from last year. "People are anxious and want to secure items and budget out their money," she says.
Even more than in previous years, small shops have to worry that penny-pinching consumers will go elsewhere, experts say. Customers have "shifted a lot of their spending away from the specialty retailers and moved toward mass value centers like Wal-Mart," says Frank Badillo, senior economist at Retail Forward, a research and consulting firm specializing in the retail industry.
The big retailers are stepping up to the plate this year with more than the usual low-cost holiday gift offerings. Wal-Mart Stores' holiday selection features 100 toys for $10, up from 10 toys last year. The promotion includes brands like Lego, Barbie and Vtech. Target says its "aggressive" discounts this year include as much as 50% off on some best-selling toys ahead of the holiday season. And it's not just toys - the big box stores are able to offer jewelry such as Elaine Miller and Plumeria jewelry, and durable holiday goods like Christmas Tree Storage Bags.
Ellen Davis, vice president of the National Retail Federation, says small businesses and specialty stores stand to be passed over this holiday season. "When price becomes a priority, other factors take a backseat," she says. "A consumer might be less concerned with quality, service or convenience than they were in better times."
To divert traffic from mass retailers, some brick-and-mortar shops are tapping into online comparison-shopping sites. Jack Parish, chief executive of The Doll Hospital and Toy Soldier Shop, a specialty toy store in Detroit, uploaded more than 15,000 toys into Google's free product search, Google Base, over the span of two days in October.
Given the weak job market in Detroit, Mr. Parish felt a need to diversify the markets he reached out to this Christmas. "Comparison shopping has become extremely important and definitely an area we want to expand into," says Mr. Parish, whose online sales in the first half of October were up 15% from a year earlier. He has also included a section on the site that compares the cost of items with gift wrapping, taxes and shipping to major competitors, as a way to edge out some of the big-box competition.
Retailers, small and large alike, are also being smarter about their inventory so they don't get stuck heavily discounting leftover merchandise like they did last Christmas. NPD Group's annual holiday spending survey found that 30% of respondents plan to spend less this holiday. The order of the day will be practical items and durable goods such as tree storage bags and other home necessities. Shoppers are not expected to spend as much on specialty items like tournament chess boards.
With average consumers turning to programs offering cash for gold, merchandisers find themselves fighting for every customer nickel this year.
After over-ordering by at least 20% last year and having to discount items as much as 80% off retail, Mickey Gee, owner of Pants Store, a small chain of four stores in Alabama, reevaluated his merchandise this year, taking a closer look at his customers' demographics to ensure that any new inventory would tap into their needs. For example, he ordered more Columbia, Levi and Wrangler brands for his store in Leeds, Ala., a rural market where those brands sell well.
Mr. Gee also invested in systems to help identify lucrative vendors and ones that were falling flat in different markets.
"It was a matter of survival last year—we had to get rid of inventory and move on," he says of being caught off guard by a shift in consumer spending. "This year we are buying accordingly."
Toy and gift shop Groovy dc rolled out its holiday merchandise in early October—a full month earlier than usual—advertising chess sets and custom chess pieces. "Because of the economy we said, let's get the inventory out while there's money available," says co-owner Manuel Cortes, who says holiday sales account for upward of 25% of the Washington, D.C., store's annual revenue. "It's a way of enticing and saying 'hey, come and get it,'" he adds.
Wonder Works, a specialty toy store with two locations in Charleston and Mount Pleasant, S.C., set up its Christmas windows in mid-September, a month and half earlier than usual, and began offering layaway weeks earlier than usual. Owner Christine Osborne says 45% of business comes between October and the end of the year. Her strategy seems to be already working—September sales at the toy stores were up 8.5% from last year. "People are anxious and want to secure items and budget out their money," she says.
Even more than in previous years, small shops have to worry that penny-pinching consumers will go elsewhere, experts say. Customers have "shifted a lot of their spending away from the specialty retailers and moved toward mass value centers like Wal-Mart," says Frank Badillo, senior economist at Retail Forward, a research and consulting firm specializing in the retail industry.The big retailers are stepping up to the plate this year with more than the usual low-cost holiday gift offerings. Wal-Mart Stores' holiday selection features 100 toys for $10, up from 10 toys last year. The promotion includes brands like Lego, Barbie and Vtech. Target says its "aggressive" discounts this year include as much as 50% off on some best-selling toys ahead of the holiday season. And it's not just toys - the big box stores are able to offer jewelry such as Elaine Miller and Plumeria jewelry, and durable holiday goods like Christmas Tree Storage Bags.
Customers have "shifted a lot of their spending away from the specialty retailers and moved toward mass value centers like Wal-Mart,"
Ellen Davis, vice president of the National Retail Federation, says small businesses and specialty stores stand to be passed over this holiday season. "When price becomes a priority, other factors take a backseat," she says. "A consumer might be less concerned with quality, service or convenience than they were in better times."
To divert traffic from mass retailers, some brick-and-mortar shops are tapping into online comparison-shopping sites. Jack Parish, chief executive of The Doll Hospital and Toy Soldier Shop, a specialty toy store in Detroit, uploaded more than 15,000 toys into Google's free product search, Google Base, over the span of two days in October.
Given the weak job market in Detroit, Mr. Parish felt a need to diversify the markets he reached out to this Christmas. "Comparison shopping has become extremely important and definitely an area we want to expand into," says Mr. Parish, whose online sales in the first half of October were up 15% from a year earlier. He has also included a section on the site that compares the cost of items with gift wrapping, taxes and shipping to major competitors, as a way to edge out some of the big-box competition.
Retailers, small and large alike, are also being smarter about their inventory so they don't get stuck heavily discounting leftover merchandise like they did last Christmas. NPD Group's annual holiday spending survey found that 30% of respondents plan to spend less this holiday. The order of the day will be practical items and durable goods such as tree storage bags and other home necessities. Shoppers are not expected to spend as much on specialty items like tournament chess boards.
With average consumers turning to programs offering cash for gold, merchandisers find themselves fighting for every customer nickel this year.
After over-ordering by at least 20% last year and having to discount items as much as 80% off retail, Mickey Gee, owner of Pants Store, a small chain of four stores in Alabama, reevaluated his merchandise this year, taking a closer look at his customers' demographics to ensure that any new inventory would tap into their needs. For example, he ordered more Columbia, Levi and Wrangler brands for his store in Leeds, Ala., a rural market where those brands sell well.
Mr. Gee also invested in systems to help identify lucrative vendors and ones that were falling flat in different markets.
"It was a matter of survival last year—we had to get rid of inventory and move on," he says of being caught off guard by a shift in consumer spending. "This year we are buying accordingly."
