Retail Jingle Bells to Ring Longer Than Ever Before
WHY YOU SHOULD CARE
Major American retailers plan to lure wary customers with discounts and a feel-good vibe for a longer than ever holiday season.
By Alistair Gray
- Retail chains such as Macy’s, Kohl’s, Calvin Klein, Guess and Target are planning to launch holiday discounts earlier than ever before.
- They’re hoping to tap into the festive spirit for longer to make up for their losses because of the pandemic and the recession.
U.S. retailers are raising the prospect that stores will dangle tinsel and play festive songs before Halloween, as stores sketch plans to start holiday-season discounts weeks earlier than usual.
The pandemic has forced a rethink of promotional tactics, meaning Christmas is set to come early for shoppers at chains including Macy’s, Kohl’s, Calvin Klein, Guess and Target, whose chief executive, Brian Cornell, says the company is preparing to start the season sooner “than ever.”
The extended promotion period promises to support retailers’ sales volumes but threatens to erode profit margins at a time when much of the sector is recovering only gradually from coronavirus lockdowns. Some executives caution that they also risk wearing out consumers, who face being bombarded with offers long before Thanksgiving.
Holiday shopping has been creeping forward for years, partly because e-commerce has diminished the importance of Black Friday and other in-store events. Yet the season will be spread over an even longer period this year in part because health authorities want to avoid a rush to stores, which increases the risk of coronavirus transmission.
Several chains, including Walmart and Best Buy, plan to close stores altogether on Thanksgiving, which had become an increasingly busy shopping day in recent years.
Presenting results, Dick Hayne, co-founder of Urban Outfitters, says his company is planning “for an extended holiday shopping period, with sales beginning earlier, reaching a plateau sooner, but missing the peaks characteristic of prior years as consumers seek to avoid crowds.”
Online, too, retailers are trying to spread demand over several weeks as an expected surge in internet shopping threatens to strain distribution networks.
E-commerce demand is set to be so high that logistics companies may impose delivery surcharges. Lee Belitsky, chief financial officer of Dick’s Sporting Goods, told analysts that he expected both FedEx and UPS to introduce “some level of surcharges.”
If there’s a lot of unemployment still, I do question the urge to shop earlier.
Ernie Herrman, TJX chief
Retailers are also planning online promotions early in the season in an attempt to counter Amazon’s Prime Day, which is usually held in July but has been pushed back until the fourth quarter this year.
Even more is at stake for retailers in the holiday season this year given the precarious financial state of much of the sector.
Earnings reports in recent days have shown how retailers’ fortunes have diverged in the pandemic. Chains such as Gap and Nordstrom have chalked up second-quarter losses while other groups including Target and Walmart have reported their biggest sales increases in years.
Macy’s said last week that shoppers in large U.S. cities were still staying away from stores as it forecast like-for-like sales would be down at least 20 percent year on year over the rest of 2020.
Some executives suggest caution against pushing too aggressively too soon.
“We’ve had this long-held tradition that we don’t decorate our stores until after Thanksgiving,” says Pete Nordstrom, chief brand officer of the eponymous department store chain. “It may be the thing that we get more positive comments about from customers than anything else.”
Ernie Herrman, chief executive of discounter TJX, which owns TJ Maxx, told analysts that while retailers were keen to begin early, he was unsure if consumers would be receptive — not least given the state of the economy.
“I don’t know if they’re going to behave that way, necessarily,” he said. “If there’s a lot of unemployment still, I do question the urge to shop earlier,” he said, noting shoppers may be able to secure deeper discounts if they waited.
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