Now that the 2004 holiday season is over, the results should be no surprise to most retailers. Happily, the season posted gains over last year’s sales, although in most sectors the growth was modest. But signs that it would be modest were evident in August, when back-to-school sales came in softer than expected.
What does back-to-school have to do with jewelry? Not much. But it has everything to do with taking the temperature of a nation and how flush its people are feeling. When they feel flush, kids go back to school kitted out with everything from designer jeans to designer sneakers to designer computers. When parents don’t feel so flush, the kids get fewer—or cheaper—goods, unless they want to ante up themselves from babysitting and burger-flipping funds.
Retail analysts look at back-to-school sales as a harbinger of Christmas, because if the parents don’t feel flush, the kids get less. Or, more likely, given that many parents don’t want to scrimp on the kids, Mom and Dad get less so the kids can have more.
Sales in the luxury sector did very well this Christmas. That’s no surprise either. Rich people aren’t overly affected by gas, food, or heating prices. But for an average middle-class family, the rising cost of almost everything is taking a tangible bite out of its disposable income. When it costs $60 to fill an SUV, a single grapefruit costs as much as a half-dozen used to, and winter means a huge heating bill every month, that’s a lot of money needed for everyday living that in other years would have been spent in the mall. And even if four hurricanes didn’t wreck Florida’s citrus crop, the cost of transporting any kind of food, grown anywhere, has to factor into prices somewhere.
But is it just the economy and the higher cost of living—or have consumers taken yet another step away from traditional shopping patterns?
I often joke about how anyone who wants to find our house need only follow the red carpet from the King of Prussia Mall to our front door. But even I—the most intrepid consumer—normally can’t get near that mall between Thanksgiving and Christmas. So seeing empty parking spaces tells me something. And when friends in other parts of the country also tell me that malls near them are not very busy, that starts to sound like a trend.
It’s an established fact that consumers are waiting later and later to do their holiday shopping. In King of Prussia last year (2003), the first two weeks of the holiday shopping season were brisk, but not crazy. Then suddenly, as if everyone just remembered Christmas was coming, the third weekend of the season found the mall and its surrounding areas in complete gridlock. Township residents used back roads to get anywhere, and if you wanted to eat at any of the mall’s restaurants, you were lucky to be seated before January.
This December, however, was a different story. Even by the third weekend, the “everyone-out-of-the-woodwork-and-into-the-mall” weekend, there was no gridlock, there were plenty of parking spaces, and there was no wait at all for a table at one of the mall’s most popular restaurants. A few stores had already begun their post-Christmas sales before Christmas Eve.
Most of the news articles about holiday business pointed to three trends: shopping—already later and later every year—going right down to the wire (as in Christmas Eve), a sharp increase in the use of gift cards, and a huge leap in online purchasing. If “Schupak’s King of Prussia Parking Lot Barometer” is any indication, these are signs to remember. Gift cards are growing increasingly popular not only because it’s more convenient for both giver and recipient but also because redeeming it after Christmas usually nets the recipient a lot more stuff. The growth in online sales isn’t surprising either (see “Digital Creep,” JCK, October 2004, page 146). If you’re busy all day and exhausted at night, which would you rather do—go to the mall or grab a mouse?
My question is what this means for the long term. Have consumers finally broken the barrier and decided to wait till after Christmas to do their holiday shopping? Is their Pavlovian response to a sale so great that we have no hope of luring them back to full-price merchandise with good old-fashioned coveting?
One certainly can’t fault the jewelry industry’s advertising. This holiday season, jewelry ads seemed to be more pervasive than ever, and most were high-quality, desire-building ads, too—not carnival-barker price ads. Kudos for that—and I’d be willing to bet the sales gains we made were specifically because of these stepped-up marketing efforts, even if some of the sales came after December 25. The important thing is, the sales were made.
Of course, watching the devastating news from Asia helps put it all into perspective—a 3 percent growth over a good year is nothing to complain about, but grousing when expectations fall short has become an American tradition—just like bargain hunting.