Local retailer concerned about holiday sales

One local retailer is uncertain about retail sales for the upcoming holidays.

Greencastle WalMart Store Manager Cliff Higgerson says he isn't sure what's going to happen this season.

"Here in Greencastle a lot depends on what happens with the automotive industry. If one of the factories were to shut down, we would all be affected. People will hold on to their money," he told the Banner Graphic.

"I know last year when the window factory in Brazil shut down five days before Christmas, everyone was in shock and sales were really down," said Higgerson.

National projections show that sales will grow at their slowest rate in six years as consumers worry about their jobs, housing, the stock market and high gas and food prices this holiday season.

The outlook from National Retail Federation (NRF) released recently joins other weak holiday predictions issued so far that will likely lead to aggressive discounting and pre-Thanksgiving sales blitzes as stores try to pry dollars from frugal shoppers.

While national holiday sales are expected to hover around two percent, local retailers estimate sales at five percent or above.

Provided there are no layoffs or shutdowns, Higgerson hopes to have a profitable but not outstanding retail season.

"It all depends on there being no layoffs and no shut downs of any of the local industries. We're optimistic," he added.

Rosalind Wells, the NRF's chief economist claims national chains have scaled back holiday inventories and seasonal sales staff from a year ago. The challenge is compounded by the holiday season that has five fewer shopping days between Thanksgiving and Christmas.

The Washington-based trade association also predicted that total holiday sales will rise a modest 2.2 percent for the November and December period from a year ago, to $470.4 billion.

That would be below the 10-year average of 4.4 percent holiday sales growth and a bit below the 2.4 percent gain last year. It would also be the slowest pace since 1.3 percent in 2002.

Nielsen is forecasting sales of more than $98 billion for the November-December 2008 holiday retail season.

A recent Nielsen survey of 21,000 U.S. households found that 35 percent plan to spend less this year than they did in 2007. Just 6 percent will spend more this year, while 50 percent say they'll maintain the same level of spending from 2007.

Lower-income households reported large reductions in their holiday spending -- but so did high income households. In all, 37 percent of lower-income households are expected to cut back on holiday spending, as will 34 percent of higher income households.

Items considered "hot" by Nielsen include necessities rather than luxuries or novelties.

Toiletries, baby care products, food items, and gift cards for groceries, gasoline, telephone and car maintenance are expected to see strong sales.

Practical, cold-weather apparel -- socks, fleece jackets, and undergarments -- and household goods, like cook books, bed/bath linens, and kitchen supplies are also expected to sell well in November and December.

Among more affluent consumers, fireplace accessories, kitchenware, family games and other at-home entertainments will dominate sales.

As in past years, DVDs, video games, mobile phones, books and wines and spirits are also expected to generate a fair share of holiday sales.

Although many consumers are curtailing their spending on out-of-home food, alcohol and entertainment, sales of movie tickets, which remain an affordable luxury, are expected to stay strong in November and December.

"The items that not 'hot' are electronics, toys, home improvement supplies and office supplies. Department stores and retailers of these items are likely to feel the brunt of the economic slowdown," says the Nielsen Survey.

Online retailers, dollar stores, grocery stores, super centers, mass merchandisers and club stores are expected to attract the lion's share of holiday spending, as consumers seek to minimize the number of shopping trips they make -- and find good values.

Given the environment, Wells expects discounters to keep faring well as shoppers focus on price.