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A carbon-copy Christmas?
Gasoline at $2 isn't the only thing troubling shoppers: How about a lack of fresh merchandise?
October 25, 2004: 3:54 PM EDT
By Parija Bhatnagar, CNN/Money staff writer

NEW YORK (CNN/Money) - The last thing retailers want for Christmas is bored shoppers.

But with just a few weeks to go until the unofficial start of the holiday shopping season, consumers are moaning that there's little scintillating on store shelves or in catalogs this year.

Couple that with intermittent "gas" pains -- prices at the pump have trod north of $2 a gallon again -- and retailers could find themselves struggling for some Yuletide cheer during a very long winter.

Marshal Cohen, chief industry analyst with NPD Group, said he's concerned about what he calls a "lack of passion" among consumers, as indicated by a holiday survey of 3,500 respondents conducted by his market research firm early this month.

"There's no real frenzy to go out and grab an item, simply because there really aren't any hot items this year," said Cohen. "The absence of an 'I can't live without this' factor means consumers will also spend less on themselves this year than last year."

According to a separate NPD online survey on holiday spending that polled 31,000 consumers, 26 percent of shoppers said they would shop for themselves over the holidays, down from 29 percent last year.

"I call this year a 'carbon copy Christmas.' There's just nothing new, different or unique that retailers are offering,'" said Cohen, adding that he estimates sales for November and December will rise 3.8 percent over last year.

"Similar to last year, a third of consumers plan to start shopping before the Thanksgiving weekend," he said. "Luxury goods and consumer electronics are again expected to do well, while apparel could take a hit. Just like last year, consumers will cut back most on sweaters, while gift cards will remain very popular."

A sticky problem

What may not be popular are sudden spikes at the pump.

It's no doubt that rising gasoline prices have put consumers on edge. At the same time, some retail industry experts say it's not yet clear if the rise will immediately translate to weaker holiday sales.

True, this year's record-setting jumps in global oil prices have bruised Wall Street on fears that the new highs could crimp U.S. economic growth.

But to an average consumer, the fluctuating cost of a barrel of crude oil has somewhat less meaning than actual price movements seen at the pump.

Going into the holiday fourth-quarter holiday shopping season, retail gas prices are already 30 percent higher than they were at this time last year.

Consumers are reacting: Discounter Wal-Mart (Research), the world's largest retailer, whose monthly sales reports are often seen as indicative of consumer sentiment, sparked industrywide jitters this summer by saying it anticipated gas price hikes will trim about $7 a week from its shoppers' budgets.

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Consequently, sales at Wal-Mart stores open at least a year, a key retail measure known as same-store sales, have been soft in recent months, a troubling sign as retailers head into the crucial November-December spending period.

Despite the gamble on gas, Bernard Sands' senior retail analyst Richard Hastings said he doesn't think the critical holiday season, which accounts for almost half of annual sales and profits for some merchants, will be a complete disappointment.

"Consumers have a way of pulling it together for the holidays," said Hastings, who forecasts holiday sales to rise from 4.75 percent to 5.25 percent. Among the categories he expects to perform well in coming months are: consumer electronics, entertainment products and gift cards.

The National Retail Federation (NRF), the industry's largest trade group, sees sales rising 4.5 percent in the 2004 holiday period to $219.9 billion, below the 5.2 percent sales growth last year.

Hastings said retailers may get a break, thanks to the timing of the gas price rises.

"We believe the tipping point for consumers, in terms of retail gas prices affecting shopping habits, is $2.75 a gallon. Some parts of the country are actually getting close at $2.40 a gallon," he said. "We're gradually going in the direction of $2.75 a gallon, but that won't happen until after the holidays."

If the first few weeks of winter are colder than expected, analysts say higher energy costs could very likely boost heating bills that hit home in late November or early December.

Will these higher bills scare consumers? Again, it depends on the timing, Hastings said.

"For most households, the home heating bill won't come through the mailbox until much later in the season, or even early January, after the gifts are bought," he said.

"Will the anticipation of more expensive bills hurt holiday sales? I don't think so," Hastings said. "I think consumer spending will see more of a marginal change rather than a substantial change, primarily at the lower-income level."

Michael Niemira, chief economist and director of research at the International Council of Shopping Centers (ICSC), agreed.

"I wouldn't count on the low-end consumer to go all out if gasoline prices suddenly soar," he said. "However, similar to last year, the luxury sector will do very well, because high-end shoppers are less affected by macroeconomic factors. So luxury could help to keep holiday spending estimates on track."  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.