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Holiday Preview
GREAT EXPECTATIONS
The millennium holiday season means different things to different people. For retailers, it’s still the most important few weeks of the year. For shoppers, there are new products, store choices and even a new sales channel. For retail analysts, it is the season of “effects”: You have the “millennium” effect, the “Y2K” effect, the “La Nina” effect and the “dot.com” effect (a cocktail of effects surely combustible enough to pique the interest of even the most jaded analyst). Look too closely at these details and you may be convinced that this is the most exciting and unusual of holiday seasons. But step back from it a little and consider: This is the eighth year of economic recovery and there is still plenty of money jangling (or rustling) in consumers’ pockets. Consider also that retail overall has had a good year and that employment, incomes and household wealth are either at record levels or at levels not seen in a generation. Consider, finally, that we were in almost exactly the same position this time a year ago. Perhaps, after all the fuss, we’re looking at a repeat of 1998?
At ICSC, we look forward to the holiday season with great interest, expectations and, as is our custom, cautious optimism. We see nothing in the retail landscape indicating a dramatic letdown from the steady sales and earnings momentum of the past year. We believe that inventory positions of retailers going into the holiday season are strong and that this bodes well for margins and profitability. The economic fundamentals are still in place. And the offerings of fashion apparel, entertainment, high-tech goods and toys are as strong as they have been at any time. As most professionals agree, we are looking at a solid sales gain.
From the perspective of retail formats, we hold to our conviction that the shopping center is still “host to the holidays”, the location of choice for the vast majority of holiday shoppers. This is not to denigrate or deny the strengths of other retail locations, each of which has unique features to offer. In particular, we believe that the burgeoning sales and marketing channel offered by the Internet is a plus for center owners, retailers and consumers. Even so, we will be looking carefully to see if online retailers are able to deploy better service and fulfillment capabilities than they did last year. It is apparent that this holiday season will be high noon for most pure-play Internet retailers, which are threatened with extinction as the dominant brands and in-place infrastructure of the traditional bricks-and-mortar retailers assume increasing control over the online channel.
To ensure success, of course, all retailers (even pure-play Internet retailers) will need an ounce of luck from the weather. So far this year they have had it: The seasons have come and gone largely on cue and retailers have been able to shift seasonal merchandise quickly. But Thanksgiving 1998–the traditional kickoff to the holiday season–was exceptionally warm and did little to put shoppers in the mood for seasonal items. (You will recall, if you read our 1998 Holiday Preview, that Thanksgiving weekend mall sales were flat compared with Thanksgiving in 1997.) The season ended well but it would be an understatement to say that the weather caused retailers some anxious moments before it was all over. Thanksgiving weekend this year wasn’t marked by extreme weather patterns. It neither inhibited nor encouraged shopping.
This Holiday Preview outlines the factors that will make or break–we think make–the 1999 season. The Preview begins with our Thanksgiving weekend mall sales results from
ICSC’s proprietary sample of 70 malls (page 2). It includes
the results of our annual Analyst Survey (page 5), ICSC Holiday Fun Facts (page 7) and a list of what is hot in the stores (page 8).
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