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Retail revs up: Experts predict modest growth in sales during gift-giving season
Retail revs up: Experts predict modest growth in sales during gift-giving season

Rich Boberg has already taken a peek at his presents, and he likes what he saw.

Of course, he isn't talking about gifts for himself. Rather, the general manager of Macy's in Missoula is giddy about the products his customers will soon be wrapping up for each other.

In February of this year, Federated Department Stores, which owns Macy's, bought out Mays Department Stores, a move that increased the parent company's purchasing power and helped the local store infuse its merchandise with fresh style, Boberg explained.

The company's seasonal Trim a Home line, for example, is new and a step up in quality, he said.

As the holiday shopping season picks up, it's difficult, as usual, to predict which way sales will go. Gas prices, which take a toll on holiday sales by cutting into consumers' disposable income, certainly have an effect, Boberg said. He's hoping prices stay down.

Regardless, he's predicting a solid holiday season.

&#8220Sweaters are going to be big this year," Boberg says. &#8220They're terrific gifts."

Macy's carries sweaters for all ages, men and women, he noted, pointing out the popularity of cashmere.

Ooh. Cashmere.

Sweaters are, in fact, one of the top gifts highlighted by consumer and retail information company NPD Group chief industry analyst Marshal Cohen, who is predicting that &#8220traditional" gift items such as clothes and toys will see the biggest growth in an otherwise lackluster season.

The overall holiday retail season is expected to see modest growth on the same scale as last year's, he said. However, according to NPD Group's Annual Holiday Survey, clothing is leading the pack as the gift item of choice, with 65 percent of consumers planning to purchase some form of attire. Coming in at second place, toys take a healthy 47 percent share.

However, Cohen also expects consumer electronics to take a large slice of the pie, with notebook computers and flat-screen TVs leading the way. Rounding out the top 10 sectors are books at 41 percent, music at 36 percent and finally fragrances at 27 percent.

And while they didn't make the top 10, the home decoration and improvement fronts still made a healthy showing at

18.5 percent and 13.5 percent, respectively.

This despite a housing market that's cooling nationally and other analysts' predictions that the home improvement sector is facing a slide. Consumers are still itching to &#8220feather their nests," Cohen said, and will satisfy this need with gifts ranging from small decorative touches to large domestic appliances.

The survey also found that the average shopper plans to spend more compared to last year. This year, the average shopper will spend $728, up from $681 last year and $655 in 2004. However, while they might be spending more, most consumers will opt to shop at discount and mass-merchant retail outlets.

Further, a full 74 percent of the survey's panelists indicated that gas prices, which are currently falling, won't affect their spending this season.

Even when prices were high, the percentage of income people were spending on transportation was still relatively small compared to previous years, said Roger Selbert, a business futurist with 20 years of economic, social and demographic experience.

Gas and energy prices were high last year but had little effect, he pointed out.

&#8220If they're concerned about gasoline, they can certainly shop online," said Selbert, editor and publisher of Integrated Retailing and of Growth Strategies, a monthly newsletter covering economic, business and consumer trends.

Indeed, one of the hottest holiday shopping trends this year is shaping up to be online sales, so retailers hoping for a bite out of this year's holiday retail sales pie - which Selbert expects will reach a record

$500 billion this year - had better have an online presence, he warned.

His optimistic expectation of 7 percent growth over last year's sales is much sunnier than the National Retail Federation's prediction of 5 percent growth, for total sales of $457.5 billion, he admitted.

&#8220I'm expecting higher because incomes are up, inflation is still low," Selbert said.

A host of factors are at play, he said. While wealth and income are increasing, delinquencies on mortgages and credit cards are down. Consumers have cash and they'll spend - though recent surveys indicate they'll spend selectively, he added.

Shoppers are searching out specific items and looking for bargains, he noted.

&#8220Everyone is a bargain shopper, even the high-end, affluent shopper - who by the way are now 20 percent of all consumers," Selbert said. An additional 50 percent are &#8220affluent-minded," meaning they recognize quality and are willing to spend top-dollar for certain items.

But for retailers, what consumers are buying is shaping up to be less important than how they're buying, he said.

That is, they're looking online first. Even if they don't end up buying online, shoppers are looking for gifts and bargains online before they go anywhere in person.

&#8220We're seeing percentages upward of 75 (percent) to

80 percent of consumers," Selbert said.

Even independent boutiques in smaller, more rural markets like Montana would do well to put up at least a basic Web site to help drive traffic to the physical store, he said. A decent Web site will showcase a variety of products, highlight any &#8220enticements," such as sales or promotions, and provide directions and contact information.

&#8220They have to put the Internet in their marketing and merchandising mix," he urged.

Reporter Tyler Christensen can be reached at 523-5215 or at tyler.christensen@lee.net.

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