Retailers Learn From 2009 and Strategize for 2010

A mood of cautious optimism and a realistic outlook for the future set in after the dust settled on this holiday’s shopping season, which had retailers worried that consumers might hold back.

While many retailers reported better-than-expected sales, it gave them few reasons to cheer. Many analysts and businesses forecast that lean times of the past year would carry over into 2010. Retailers would have to continue to press for ways to cut costs, offer unique merchandise and prospect new markets to keep their businesses in the black.

That being said, retailers welcomed the positive shopping news released on Dec. 28 by MasterCard Inc.’s SpendingPulse research organization. It found that consumer spending increased from 2 percent to 4 percent from Nov. 1 to Dec. 24 compared with the same time last year, which was the weakest holiday sales season since 1970. It was a sign of increased confidence in the economy, said Michael McNamara, vice president of research and analysis for SpendingPulse.

“Overall this year, we have seen increasing stability in spending, as opposed to the free-fall of 2008,” he said in a statement. SpendingPulse’s research showed mixed results for apparel during the holiday retail season.

From Nov. 1 to Dec. 24, men’s apparel sales increased 3.9 percent over last year. However, sales for women’s apparel decreased 0.3 percent during the same period and specialty apparel declined 0.4 percent. The season’s best sales performance came from e-commerce stores. Their sales jumped 15.5 percent.

The final word on the 2009 holiday retail season probably will be confirmed on Jan. 7, when many public companies report their December sales. But SpendingPulse’s announcement showed that retailers had beaten some dire holiday forecasts of weak sales.

Chicago-based market researchers ShopperTrak had been predicting a 4.2 percent decline. The National Retail Federation, a trade group in Washington, D.C., expected 2009 holiday sales would decline 1 percent. However, the New York–based International Council of Shopping Centers made one of the season’s more optimistic forecasts when it said that holiday sales would increase 1 percent to 2 percent. According to an index compiled by the ICSC and Goldman Sachs, sales for the week ending Dec. 26 edged up 0.4 percent compared with the previous week.

Janet LaFevre, senior marketing director of the Glendale Galleria retail center in Glendale, Calif., said an increasing number of consumers bided their time for a deal. “The challenge has been converting visitors into paying customers,” she explained. “The customer has to be compelled to make a purchase. They’re waiting for added value or a gift with a purchase.”

According to Francine Miley, marketing director of the Fashion Valley retail center in San Diego, consumers avoided items that might be deemed to be out of style by the next season.

The decent, if anemic, finish to the year had retail analyst Jeffrey Van Sinderen believing that many retailers would enter the year with strong balance sheets. However, they would have to find ways to adapt to a new consumer psychology, which is to buy everything at a discount. “The industry must train people not to wait for big discounts, sales and promotions,” said Van Sinderen, who works for Los Angeles–based financial-services company B. Riley & Co. “They have to be trained to buy something when they see something they like. They might not see it when there is a sale.”Charting new territory

Boutique owner Alisa Loftin said this kind of re-education was a tall order because even the fashion-savvy consumers who patronize her 10-year-old Los Angeles boutique, Aero & Co., were not impulse shopping this season.

To inspire these shoppers to take a chance, she will have to do a balancing act in the upcoming year. She planned to devote her boutique to fashions no one else carries, specifically emerging designers not on the radar screens of big retailers. These designers also would have to price their goods to land in that consumer sweet spot of between $100 and $200. They also can’t take too many design chances, which might turn off some skittish consumers.

Retailer Dave Hollander is branching out this year and finding new opportunities by being one of the first retailers to service a growing trend: paddle surfing. This is where athletes kayak around rivers, lakes and oceans with a paddle and a longboard.

In mid-January, his small retail chain, Becker Surf, will open a 7,000-square-foot store called Becker Paddle Surf in Mission Viejo, Calif. Since it’s a growing sport, he believes he can open Becker Paddle shops in waterfront areas where surf has not been strong, such as Lake Tahoe, Calif.

But serving a new sport means cutting back on his traditional surf stores. He plans to close two Becker Surf stores, which sell surf and skate clothes, in Corona del Mar, Calif., and Huntington Beach, Calif.

When all is said and done, his Hermosa Beach, Calif.–based chain will maintain five physical stores and one e-commerce operation. He said he will spend much of the next few months analyzing which fashion labels sell at Becker Surf and which ones he should drop. “It won’t be business as usual,” he promised.

Veteran store owner Don Zuidema plans to improve his business this year by focusing on basics, polishing sales techniques and doing customer outreach for LASC, his 27-year-old shop in West Hollywood, Calif.

During the holiday season, LASC concentrated on customers known to be big spenders, generating more income during the holiday season. “I hope it keeps improving,” he said of his store’s sales. “That would be a change compared to the last year.”