Last week, ShopperTrak was the first out of the gate with official holiday projections. ShopperTrak is expecting holiday retail sales during the November/December period to grow 3.3 percent and foot traffic to increase 2.8 percent over the same period a year-ago.

In other holiday-related news, a survey by the consulting firm Hay Group suggests some retailers plan to increase the number of temporary workers this holiday season. According to the results, 57 percent of retailers who participated said they would keep staffing levels consistent with the prior year while 36% plan to increase hiring. Seventy-five percent of respondents said their holiday sales would be higher this year compared to 2011.

Finally,Walmart unveiled its top toys last week. Topping the list is FURBY (though it isn’t on my list), followed by Leapfrog LeapPad 2, and VTech InnoTab Learning App Tablet.  It is worth noting that two of the top three items are tablet-esque devices designed for children. Toys “R” Us hasn’t yet released their top 50 “hot toy” list, but they have announced a forthcoming hot toy reservation service which lets parents reserve (with a 20% down payment) prespecified “hot” toys this holiday season.

Both Walmart and Toys “R” Us have touted their free layaway program (Walmart rolled back their layaway fees after Toys “R” Us announced their free layaway program).

It is shaping up to be a very competitive holiday season – not a surprise given the strained economic climate.  Unemployment remains elevated, wage growth is stagnant, and both consumers and businesses remain skittish.  Despite some signs of an improving consumer (which I’ll talk about in a future post), there remain a plethora of uncertainties (elections, Europe, geopolitical, etc).  There also continue to be a variety of headwinds (weather events like droughts, etc) that have arisen seemingly out of nowhere over the last three or four years of the economic recovery.

Here are a few of my early Holiday 2012 expectations and tech predictions:

More shopping days between Black Friday and Christmas should marginally boost holiday shopping

Retailers will open (even) early for Black Friday in 2012.  Last year several retailers opened earlier than they had in 2010 and I expect this to continue marginally in 2012.  In 2011, Toys “R” Us opened at 9PM on Thanksgiving night after opening at 10PM in 2010.  I wouldn’t be surprised if Toys “R” Us opened at 8PM in 2012.  Best Buy and others moved from a 5AM Friday opening to a Thursday midnight opening in 2011.  Overall, most retailers were happy with this move as it drove additional traffic and store sales.  Consumers also generally seemed to like “staying up” instead of “waking up” to shop.  With additional shopping hours, the year-over-year comps looked good.  Retailers will need to open as early (if not earlier) in 2012 to address year-over-year comps. They need to allow for the same or more shopping hours.

Weather could play a big role for Black Friday.  Last year the weather was very mild in much of country for much of the holiday season but especially during Black Friday weekend.  This contributed positively to Black Friday traffic and sales.  Mild weather could once again support a strong Black Friday, but cold weather could be a major headwind to year-over-year growth.

Online will be more pronounced than ever. Last year, consumers turned online during Thanksgiving Day to research deals and shop online.  I expect online activities to be more pronounced in 2012 – with greater online traffic on Thanksgiving Thursday and higher sales.  Beyond Black Friday, I think online traffic will be up across the board.  I expect to see retailers offering timed (ie temporary) deals and offers throughout November and December.  These could even begin to accelerate in October. In the past I’ve referred to these timed offers as the “Groupon Effect.”

The November elections will impact the holiday season. Regardless of your own political affiliation and who wins or loses in November, I believe the elections will push early holiday shopping that might have traditionally taken place in early November to the back-half of November and into December.  ShopperTrak alluded to this effect as well.  Late October and early November will be dominated by campaign ads and not retail-oriented ads.  Individuals will be preoccupied by the election and the uncertainty thereof will dampen the desire to shop.

Tech Dominated by Tablets, Smartphones, and Computers. CEA will release their official holiday expectations next month including what tech products consumers are most predisposed to buy.  I expect that research will show consumers are very interested in buying tablets, smartphones, and computers this holiday season.  I’ll write more about this in future posts.

Retailers will have a focus on exclusives and house-brand items in 2012.  Walmart recently announced they would have 150 exclusive items in their toy department.  Toys “R” Us recently announced the launch of Tabeo.  I expect retailers to push the value proposition of house brands.

more to follow……

Over the last 2+ years, Wall Street analysts have pounded BestBuy on the size of their big box store fronts.  Best Buy recently announced another 42 store closures – bring to 50 the total stores that will shutter in 2012.  Best Buy has also worked over the last year to shrink their footprints.  In some instances they have sublet some of their store square footage and in other instances they have given space back to the landlord.  In their announcement last week, they recommitted to build out the smaller-format Best Buy Mobile store concept and remodel existing stores with a new Connected Store format.

But are overall square footage and the footprint of their stores, the key issue?  Wall Street’s motivation is driven by shifting dynamics within the consumer electronics space.  Sales of large-format devices like televisions are declining while small-format devices like smartphones and tablets have driven overall industry growth for the last two years.  As small-format devices dominate, Best Buy – as the Wall Street logic goes – should reduce square footage because smaller devices suggest less showroom space is necessary.

Beyond form-factor changes, the current (and temporary) decline in television sales and increase in sales of mobile-oriented devices have also had other impacts on consumer tech retailing.  Importantly, more retailers are merchandising these mobile categories.  While 5-6 retailers might offer traditional devices like televisions, mobile phones and tablets are being sold by these 5-6 traditional retailers and are additionally being sold by a host of “new” tech retailers.  These new tech retailers include cellular carriers through their stores and websites.  Manufacturers are also increasingly marketing devices directly to consumers.  Apple iOS devices and Amazon with their suite of Kindle devices are only two examples of manufacturers going directly to consumers.  In both of these cases, these companies have strong retailer ties.  While Apple started as a manufacturer and has also transitioned into a retailer and Amazon went the other direction – the end-state is similar with the manufacturer of the underlying device having a strong and unique presence as a retailer. It is also commonly reported that margin differentials between devices like televisions and smartphones and tablets are pronounced.

The consumer tech landscape is ever-changing and at different times over the last 50 years, these changes have dictated a changing approach to consumer tech retailing.  The current changes are surely pronounced, but it isn’t clear to me that less square footage will address the true underlying changes.

This month Amazon’s new tablet the Kindle Fire and Barnes & Noble’s Nook Tablet go on-sale this month.  While both products are technically the house brand of competing retails, they’ll be widely available  in a variety of retail channels.  One would typically presume that a consumer interested in the Kindle Fire would just go to to make the purchase while someone interested in the Nook tablet would go to or a B&N store.

In fact, shoppers like to compare – even when they think they’ve made up their mind.  A series of new tablet offerings – both garning strong media buzz – is a positive for retailers. While it is always difficult for a retailer to make margin selling what is a akin to the house brand of their competitors, the introduction of several competing devices creates a catalyst for consumers to enter into stores and compare.  This will help drive traffic, potential sales of the devices, but even more important is sales of the higher-margin accessories. With the significant decline in physical media, several other elements are becoming traffic drivers.  Today’s hottest hardware devices are now traffic drives.  Confusion or multiple available selections within a category are also key traffic drivers.

My title is a bit deceiving – retail sales definitely do show strong seasonal trends driving by year-end holiday buying. As the chart makes evident, retail sales are very seasonal.  For GAFO, which represents stores that specialize in department store types of merchandise (furniture & home furnishings, electronics and appliances, clothing & accessories, sporting goods, hobby,
book, music, general merchandise, office supplies, stationery, and gift stores), December sales represent about 12 percent of the annual total retail sales and November and December combined represent about 21 percent of annual retail sales.

At the same time, consumer surveys suggest consumers are continuing to push purchasing later into the year.  In just the last few years an increasing number of consumers are reporting they are beginning their holiday shopping later in the  holiday season (and therefore later in the year).  This would seem to suggest that we would see a greater portion of annual retail sales represented by November and December.  As I recently wrote, consumers are increasingly delaying their purchasing in anticipation of deals, discounts, and bargains that materialize later in the holiday selling season (ie Black Friday). But when one looks at the contribution November and December sales make to annual retail sales the share for November and December doesn’t appear to be changing  – at least not according to the official statistics.



For the last 18 years, CEA has conducted and published a holiday outlook. This research has revealed that overtime consumers are starting (and likely ultimately finishing) their holiday shopping later in the year.  Over time fewer are starting their holiday shopping in September and October and more are beginning in November and December. I credit this shift to shoppers waiting on deals and other promotions. Certainly the growth of Black Friday contributes to this phenomenon.

The Wall Street Journal recently reported UPS is also expecting shopping to be pushed later into the shopping season.  To quote the WSJ report:

United Parcel Service Inc. forecast what it called a “solid” holiday shipping season Monday, saying volume during the hectic week before Christmas will be up 6.2%  from last year. It also said it will boost seasonal hiring 10% to 55,000 temporary employees.

The Atlanta-based company didn’t provide an overall forecast for the traditionally busy period between thanksgiving and Christmas, saying the peak shipping season has been shortened because consumers are increasingly shopping
online and delaying purchases until late in the year.

“Before the explosion of e-commerce, the holiday peak season stretched from Thanksgiving to Christmas, [but] now it’s been compressed to the last two weeks before Christmas,” the company said.

It forecast 120 million deliveries during the peak week, up from 113 million last year.

UPS also said its global delivery volume “will approach” 26 million packages on what it anticipates will be its busiest day of the year, Dec. 22.

The article also reported FedEx’s recent announcement that “it expects its package volume between the traditional Thanksgiving-to-Christmas peak shipping period to be up 12% from last year, and it forecast 17 million packages on its busiest day, up 10%.” It is clear the growth of promotions, the skittish nature of consumers in waiting for promotions, and the rise of ecommerce are all driving shopping later into the season.

Consequently this puts pressure on supply chains – notably on manufacturers and retailers.  Historically, retailers could judge the holiday season by examining the start of the holiday season.  It was early enough that they could then order additional merchandise as needed.  But now the sales are happening later so retailers aren’t receiving a good gauge of the season until it is largely too late to order additional merchandise.

Each year I predict the lowest pricing we’ll see for a variety of tech products during Black Friday.  Last year I predicted we’d see notebook computers selling for as low $299.  In fact Walmart sold a notebook for $198 on Black Friday.  This year I’m predicting the lowest prices we’ll see for notebook computers will be $250 – actually higher than last year. Tonight Walmart’s Black Friday circulate was leaked and it highlighted a notebook computer for $250 – consistent with my forecast and higher than last year’s price.  You can see Walmart’s entire circulate here.

Amazon is now a library – sorta. Last week, Amazon launched the Kindle Owners’ Lending Library which gives Kindle users who own an actual Kindle device (and not just use the Kindle app on other devices) AND are Amazon Prime subscribers access to 5,000+ books they can “borrow.” A few things worth noting:

1) this is probably the first example of a subscription service for digital books.  We have subscription services for other digital content (music, video, games) so books are a logical step. I assume all digital content will eventually be available either through a unit price or through a subscription service.

2) Amazon is quickly making all of their subscriptions a part of their Prime offering.  Prime subscribers now have a digital video subscription (instant streaming of movies and TV shows), a digital library subscription, and a free two-day shipping subscription. With each addition, Prime subscription becomes more attractive to two audiences, the first audience is the group that actually wants the new additional offering and the second audience is the group that finds the new addition attractive on the margin (and of value when coupled with the entire suite of services).  Ultimately this raises the number of overall Prime subscribers which in turn provides Amazon with more collective bargaining power and consequently the ability to increase the value of what is offered.  In other words, Amazon can go to the studios or publishers or whomever and say, “hey we have XXX million subscribers to our video/book/fill-in-the-service and we’d like you to do/provide/settle for….”