Why This Holiday Season Will Have Impact Beyond 2006
Tis the retail season for loss-leader turkeys and fistfights over Sony PlayStation 3. Food retail executives are already giddy this year because they believe Santa will be generous. “People have more money, the economy is more stabilized, there are lower mortgage rates, the stock market is at an all-time high, and elections are over,” said John Azzolina, vice president of finance and information technology for Food Circus, Middletown, N.J., in an article in last week‘s SN. “We‘ve been having decent sales, and I don‘t see us dropping.” Azzolina‘s outlook was echoed by a number of other supermarket executives who predicted good sales, spurred partly by lower gas prices. Supermarkets are gearing up with new rewards programs, special touches in deli and bakery, and lots of cross-merchandising. These stores know how to make a big splash for the holidays, and shoppers have come to rely on that. In fact, consumers actually find supermarkets a welcome relief from the frenetic pace of general merchandise outlets this time of year. None of which means that supermarkets‘ top brass should feel relieved. Wal-Mart, after all, is fired up about being more aggressive on price for the holidays. Also, there are real questions about how long the positive consumer mood will last. The Conference Board‘s Consumer Confidence Index took a surprise drop for October as Americans showed concern about the job market. Some analysts point to clouds on the horizon next year resulting from a softening housing market and rising consumer debt. Meanwhile, a new report from PricewaterhouseCoopers‘ Retail & Consumer Industry Practice states that while consumer products companies are optimistic about the U.S. economy, many are concerned about energy prices and have reduced hiring plans. So while signs point to a robust holiday, the path is less clear going forward. Retailers will do well to create bonds with consumers in December to help retain them well into next year. That means focusing on more than price. The centerpiece of Thanksgiving, the turkey, is already a price-promotional item. There‘s no reason to extend that to other categories. Many supermarkets are wisely showcasing more upscale fare for the holidays. A recent SN article explained that some consumers are embracing heritage or organic turkeys, a growing merchandising opportunity. A story in this week‘s issue (Page 33) outlines unique promotions to engage consumers, including Wild Oats Markets‘ live online chat about wines, Dierbergs‘ 40-page holiday idea book and Hy-Vee‘s novel program that sponsors surprise visits to homes in which it rewards consumers for stocking the store‘s private-label products. These are all efforts to interface with customers outside of the usual store experience. Supermarkets need to find other clever ways to spotlight health or ethnic merchandising, customer service and superior fresh foods, among other attributes. It‘s also a good idea for retail executives to walk the aisles to see whether promotions are having the intended impact. It won‘t take long to tell whether shoppers are interested. And remember to duck if someone throws a PlayStation in your direction.