WHAT WILL THE HOLIDAY SEASON BRING? CAUTIOUS SHOPPERS AND DISCIPLINED SPENDING - Buxbaum Group’s Stevan Buxbaum says consumers will buy better but fewer gifts
CALABASAS, Calif. (10/23/06) – The coming holiday season won’t bring much joy to the nation’s retailers, retail expert Stevan Buxbaum forecasts.
Buxbaum, a veteran of the retailing business who is executive vice president of Calabasas-based turnaround investors and consultants Buxbaum Group, says retailers can expect a small increase in holiday sales but no real strength – the same kind of middling performance they saw in back-to-school sales this summer.
“It will be a season without much steam. Same-store sales may rise a little, but you won’t see anybody knock the cover off the ball because the overall mood of the consumer is cautious,” Buxbaum observes. “That will translate into very disciplined spending, with people being very choosy and buying quality rather than quantity.”
Unlike past years when items such as denim were extremely popular with shoppers, it’s not clear what this season’s best sellers will be, Buxbaum says.
“Denim has gone on for so long that there is no burning desire for it among shoppers,” he contends. “Electronics have been selling well, especially flat-screen televisions because prices are down. That strength will continue during the holiday season, but it won’t be overwhelming because large numbers of people have already bought them and consumers with less disposable income are still waiting for prices to drop even further.”
Among toys, Buxbaum says, look for strong sales of the season’s hottest offering, the Elmo TMZ doll. “It’s the latest generation of the Elmo doll, and it’s what everybody is talking about,” he notes.
But don’t expect a repetition of the price wars of years past, when retail giants Toys ‘R’ Us and Wal-Mart slugged it out for the hearts and mind of shoppers. “Toys ‘R’ Us is now privately held, and the new owners will be less inclined to do unprofitable business. That means there will probably be fewer sales and more price stability, and you won’t see the battle we saw before,” Buxbaum believes.
Buxbaum notes that luxury items may continue to perform well this season. For instance, high-end men’s watches are selling briskly, he relates. Interestingly, that corresponds with a sharp drop in sales of juniors’ watches. “Watches for kids are really dead,” he says. “They don’t wear them anymore, since timekeeping is built in to the other things they own, like cellphones.”
What fashions will be hot? Expect to see more narrow-leg pants and jeans, Buxbaum relates. “People will want to have that new look. It’s the opposite of the past few years, and wearing them will make it easier for others to judge your fashion quotient,” he comments.
Buxbaum also expects strong sales of luxury leather goods, an area in which more and more retailers are competing fiercely. “There has been a real proliferation of expensive handbags,” he notes. “They are an easy item to buy. One size fits all and people can always use them. I’d look for a battle of the bags this season.”
But while luxury may do well, there is growing consumer concern about the economy, he notes.
“External factors are weighing heavily on their minds. They hear that the housing market is weak, and if they hear enough times that the economy is slowing down, that will affect their spending,” he explains. “In particular, between the impact of the weakened housing market and significantly higher interest rates from a year ago, many consumers who use their home equity lines to finance major purchases are having second thoughts about tapping that resource. Added to that, of course, are the impending huge cuts in payrolls at automotive manufacturers and companies that serve them. While some of these factors will be tempered by the sharp drop in gasoline prices seen over the past few weeks, in general, people are not going to be as loose with their money as they were in the past.”
“All things considered, it’s hard to predict what this season will be like,” Buxbaum concludes. “This is a time of great contrasts. The stock market is at an all-time record, yet there is bad news from the Mideast, North Korea and Washington. It’s the best and worst of all worlds all at the same time, and that makes the mood of consumers harder to judge with certainty.”
About Buxbaum Group - Buxbaum Group built its reputation for over 30 years as one of the largest liquidators and appraisers of retail and wholesale inventories across North America. While continuing to operate in those areas, the company has shifted its primary focus in recent years to turnaround investing.
Press Contacts: At Buxbaum Group, Steven Buxbaum, (800) 990-6820; at Parness & Associates Public Relations, Lisa Kreda or Bill Parness, (732) 290-0121