As we mentioned on Shop Talk this morning, the National Retail Federation expects total holiday sales this year to fall 1 percent.

The trade group held a conference call later in the day to add details about their forecast. Here is what NRF spokeswoman Ellen Davis said about the forces that will shape the upcoming holiday shopping season:

Unemployment:

“The golden ticket this year for the holiday season is going to be unemployment. With the unemployment rate at about 10 percent, we know that a lot of Americans will be pulling back on the holiday season because they have to, because they don’t have a job or because someone in their family doesn’t have a job.

“But the unemployment picture really goes far beyond that 10 percent because anyone who knows someone who is out of a job, looking for work or is concerned about losing their job is going to be pulling back. You don’t want to be the guy who drives up in a brand new BMW if your neighbor just got laid off.”

Retailers’ efforts to prepare for this year’s impending holiday season:

“This year, retailers knew going in consumers would be very price conscious and frugal for the holiday season and they’ve been able to plan accordingly.

“They’re doing everything they can to cut back on their operating costs. They’re pulling back on inventory. As we have seen from NRF’s port tracker report, retail containers to the nations’ ports are down to the levels we saw in 2002 and 2003, which is an indicator that retailers really aren’t shipping as much to their stores as they may have been in previous years.

… That will help retailers protect their profits and will keep them from, we think, having to resort to any panicked, unplanned markdowns at the last minute because they have too much merchandise.”

What shoppers can expect to see in stores:

“For the holidays specifically, we are expecting retailers to focus on a lot of lower-ticket items. This will be the holiday season of the blue jean instead of the Blu-ray.

… Absent, we think except perhaps for Black Friday, will be a lot of promotions of flat screen TVs and laptops. So, really more of a focus on the basics, the necessities and the lower-priced items this holiday season.”

“We are expecting a lot of aggressive discounts and promotions. The good news … is that retailers should be able to protect their profit margins this year because they have been planning these sales and promotions throughout the holiday season. Because they have done a nice job controlling their inventory, retailers really won’t have as many issues with unplanned markdowns as they may have a year ago, but consumers may start to find that retailers are coming out with many aggressive promotions and deals very quickly.”

(Photo: Reuters)

Check Out this slightly more optimistic holiday sales forecast.

The International Council of Shopping Centers (ICSC) said the 2009 U.S. holiday season is likely to be “a lot better” than last year, with sales rising roughly 1 to 2 percent.

The forecast, perhaps the most bullish yet, comes after a dismal 2008 holiday season that by some accounts was the worst in about 40 years.

Forecasts issued so far this year call for holiday sales to be flat to down versus last year, but some of those surveys use different methods for estimating sales.

The ICSC said holiday sales “in its many forms” — same store sales or total sales — could increase by about 1 percent to 2 percent, with sales at stores open at least one year rising 1 percent for the holiday shopping season of November and December.

Also in the basket:

Asian convenience stores ride the recovery

Zumiez raises Q3 earnings outlook

H&M signs Rykiel in latest high end venture

Gap co-founder Donald Fisher dead at 81

(Photo/Reuters)

Check out a rather glum outlook for the Christmas shopping season.

Last year, holiday sales notched their worst performance in nearly four decades.

This year, they could be a “train wreck” says Britt Beemer, founder and CEO of America’s Research Group.

According to the latest Consumer Mind Reader survey released by America’s Research Group and UBS, 81 percent of respondents said they are pressured by family debts, forcing many to shop less and spend less. 

 “The data foretells a very scary Christmas shopping season with consumers radically cutting back at a time when retailers need shoppers to shore up sagging retail sales,” Beemer said. 

“I am fearful Christmas will be a retail train-wreck this year.”

Earlier this week, Beemer told Reuters that U.S. consumers are still cautious about eating at restaurants and are not planning to loosen the purse strings for holiday spending this year despite signs the economy is improving.

“Everybody wants the recession to be over, but nobody has told the consumer,” Beemer told Reuters.

According to the survey released on Thursday, more than three quarters of families are trying to cut back on how much they are spending.  The average amount that American consumers are cutting out of their monthly spending is $191.11, the highest figure ever recorded for spending cuts in 13 years of ARG Consumer Mind Reader surveys.

Of consumers cutting back, 60.1 percent said they have accepted this new, lower spending level — even when the economic situation improves and they could afford to spend more. 

Also in the basket:

New normal? U.S. consumers coming back cautiously

Pier 1 posts smaller-than-expected loss on cost cuts

Dan Brown novel breaks one-day sales records

Gowns go with the flow on New York fashion runways

Fashion Houses Forced to Test Radical Ideas (WSJ)

(Photo: Reuters)

Santa’s not getting any rest this year.

After U.S. retailers posted the longest running decline in same-store sales in nearly a decade, Sears, Kmart and Toys R Us announced Christmas-themed sales for the month of July.  While actual sale dates and locations vary among the three chains, the event has drawn a lot of attention from news media, which had the once-in-a-year joy of headlining a story with “Christmas in July.”

Not to be outdone, Disney has sent a train to 36 states around the country to promote its new animated film “A Christmas Carol,” slated for release this November.  Yes, November.

The re-purposed Amtrak train is filled to the brim with Disney Christmas items, the latest in cinematic 3D audio and video equipment, a lot of HP computers, and even artifacts on loan from the Charles Dickens Museum.  Oh, and it has a picture of Ebeneezer Scrooge on the front.

Whether any of these campaigns will work is anyone’s guess.  But for now, at least, it gives us all a chance to laugh and play and maybe even listen to some Bing Crosby records.

With so many forecasters talking about the 2008 holiday season in extremes (the weakest since 1970, one of the worst in modern times), it’s refreshing to hear an executive suggest that, ok, things were not great, but they weren’t horrible either.

That assessment came on Wednesday from Rob Sands, chief executive of Constellation Brands, when the world’s largest wine producer and maker of Robert Mondavi, Vendage and Ravenswood wines reported third-quarter earnings.  

Sands, whose company also sells spirits and beer, said beer sales growth was accelerating due to the recession, while sales of spirits were getting hurt the most.

Following is an excerpt from a conference call CEO Sands and his management team hosted with analysts in which he discusses the impact of the recession on sales of alcoholic drinks:

          In the United States, market conditions remain pretty healthy as measured by consumer take-away … for the wine business. The spirits business has probably been impacted to the greatest extent with growth … getting near flattish … The beer business has actually accelerated in general during the economic downturn.

Regarding the holiday season, Sands said:

          In the US in particular for beer it wasn’t necessarily a stellar holiday season, but a lot of the IRI data (which tracks sales of packaged goods) that is being quoted is (through) 12/28, whereas last year it was through 12/30 … One of the things that characterized this holiday season is consumers definitely waited until the last minute to do their shopping. So, on beer I think that in the end it will probably wrap up to not be a fantastic holiday season, but on the other hand, I don’t think that it is going to wrap up to be as bad as the … currently published IRI data suggests. 
    
          On wine … anecdotally from our wholesalers … it appears … consumer take-away was pretty good over the holiday season. So when everything is reconciled we are hopeful that it is going to look pretty good. 

(Photo: Reuters)

Check out the days of reckoning for retailers.
 
This week most U.S. retailers will tell us how December sales went. The news is not likely to be good.
 
According to Thomson Reuters data, Wal-Mart is about the only one that saw an increase in same-store sales. With a recession, job losses, falling home values and tighter credit, it’s not surprising that most people cut back and that sales fell for most retailers.
 
But what will be more telling is how much the big sales — like Jos A Bank’s three-for-one suit sale — lead to profit warnings by retailers. Those deep discounts may move merchandise (though even that is debatable in this environment), but they come at the expense of profits.
 
Retail stocks have actually outperformed the broader market in the past month. But the depth of the profit warnings will likely determine whether those retail stocks also go back on the discount rack.
 
Also in the basket:
 
UK retailers ease Christmas fears, but gloom lingers
 
Smoking ban in cafes puts French off cigarettes
 
Coming down on tobacco (N.Y. Times)

(Photos/Reuters)

Check out shoppers with fresh credit loosening their purse strings a bit - at least for now.

“There’s no question there’s some pent-up demand,” as over the past three months consumers saved and paid off their credit cards bills instead of spending, said Stifel Nicolaus retail analyst Richard Jaffe. 

Now, “the credit cards are reloaded and the consumer has the ability to spend” on both holiday gifts and personal items such as clothes they had been holding off from buying, amid rising food and gas prices, falling housing values and shrinking credit availability.

Still, many leading U.S. retailers reported steep drops in November sales at stores open more than a year, as bargain seekers at the beginning of the holiday shopping season were unable to save a very tough month.

When those holiday promotions taper off, consumers with lingering credit card debt from holiday gift-giving and less discounted items will likely put the brakes on spending yet again, says Jaffe.

Also in the basket:

Safeway to cut costs, prices in 2009; shares rise (Reuters)

Rite Aid posts flat November same-store sales (Reuters)

Mattel wins court ban of MGA’s Bratz dolls (Reuters)

(Photo/Reuters)

While most of the United States is singing the holiday blues, here are some views from laid-back Los Angeles, where recession humor is starting to take hold. Photos are mine:

And when the economy gives you empty shopping carts, make art…

Check Out what the shrinking U.S. economy is doing to apparel sales.

The Paris-based Organization for Economic Cooperation and Development says the U.S. economy has probably slipped into a recession that will last through the middle of 2009.

But forget Paris, you don’t need to look any further than today’s results from apparel retailers for proof that the U.S. economy is in a slide.

Two retailers that cater to women over the age of 35, Talbots Inc and Chico’s FAS, each saw sales at established stores fall more than 13 percent in the latest quarter.

Third-quarter net profit at Chico’s, which also operates White House Black Market stores, withered to $2 million from $23.6 million a year earlier as mark-downs also pounded profits.

Talbots, which specializes in classic looks, saw its loss from continuing operations expand to $14.8 million from less than a million in the year-earlier third-quarter.

Elsewhere, Charming Shoppes, which sells plus-size clothing for women, had a bit of good news. It reported a smaller-than-expected loss, but said it expects a wider loss for the holiday quarter.

It goes without saying that none of these results bode well for the all-important holiday shopping season, which is expected to be the worst since the early 1990s.

Also in the basket:

Small U.S. stores adopt personal touch to survive

Fed announces new plan to support mortgages

Home prices plunge in September

GDP contracting deeper than first thought

(Photo\Reuters)

Online retailer Overstock.com is pitching a rescue package for shoppers who are neck-deep in debt.

The company’s “Family Bailout” contest will pay off up to $50,000 in debt belonging to the winner or a member of his or her immediate family. The money gets paid directly to “qualified” creditors like mortgage or credit card companies.

The retailer, which sells excess inventory of clothes, furniture and other items, automatically enters people in the contest when they make an order. People who are too broke to shop or those who want to have the company bail out a friend, can fill out an online form on the site.

“We’re sinking into the most challenging economic environment since the
Great Depression,” said Patrick Byrne, Overstock.com’s chairman and CEO. “This
is our way of lending a helping hand to those that need it.”

Overstock’s move is just the latest effort by a retailer to entice shoppers as the industry heads into what could be its most dismal holiday sales season since the early 1990s.

Amazon.com is already running ads touting deals for a limited time. Items on sale on Monday included a Nikon Coolpix 10-megapixel digital camera for $146.95 (a savings of  $53, according to the website).

Online jeweler Blue Nile began offering a personalized shopping service to help find or order jewelry — a segment that has taken a painful blow from consumer cutbacks in the past few months. The company is betting good customer service is crucial to winning over consumers this holiday season.

The Internet shopping wars are on — may one lucky consumer win some credit relief.

(Graphic/Overstock.com)