Retailers Report Sobering Sales As Lead-In To Holidays

As if retailers didn't have enough to think about, what with plenty of sobering October sales results hitting the news and subdued holiday forecasts: About 80 percent of consumers are expected to buy someone at least one gift card, according to a new survey from Retail Forward. The Columbus, Ohio-based consulting group estimates that as many as 20 percent of total holiday sales could come through gift-card purchases.

That's good news for people who like to choose their own gifts. But it could spell trouble for retailers, since it means that consumers will likely spend their gift cards in January and February, when merchandise has been marked down, said Mandy Putnam, vice president and manager of ShopperScape, Retail Forward's database of 4,000 shoppers. "It makes it very difficult for retailers to get a handle on how they've done," she said.

Consumers love gift cards, she said, because--just as retailers can't predict what will be a holiday hit--many shoppers can't figure out what they should buy loved ones, either. "Buying a gift card from a store like Crate & Barrel shows thoughtfulness, in a way that simply giving money doesn't, but there's no risk of the person not liking it," she said.



Upscale shoppers are the biggest fans, with 84 percent of upscale respondents planning to buy at least one gift card, and spend an average of $199 on it. Among middle-income shoppers, about 80 percent plan to buy at least one, spending an average of $136. And 68 percent of down-market shoppers plan to buy at least one, with an average amount of $84.

Retail Forward also said that October's retail sales, based on a composite of 60 stores, managed just a 3.3 percent gain, down from a 4.3 percent gain in September, and a 4.4 percent gain in October 2005.

Gap, Pier 1, and The Sharper Image were among the chains posting declining same-store sales this week that were even worse than forecast. A few darlings, such as Abercrombie & Fitch and Chico's, also stumbled. Among those who beat expectations: Nordstrom, the Limited, and Federated Department Stores, which owns Macy's and Bloomingdale's.

Separately, Wal-Mart--which announced extremely weak sales gains of 0.5 percent for October--kicked off its new holiday campaign, themed "Be Bright," from outgoing agency Bernstein Rein. The multimedia humorous campaign, including 17 spots shot by director Jason Reitman, also includes print, online and cinema ads.

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