Luxury goods, gift cards to propel higher holiday sales

Improved demand for luxury goods and gift cards should help Iowa retailers gain some ground on last year's bleak holiday sales results, ndustry observers predicted Thursday, Nov. 18.

The International Council of Shopping Centers predicted comparable store sales will rise 3 percent to 3.5 percent for the important November-December sales and a closely-watched industry analyst predicted “low to mid single digit” increases in overall holiday sales.

The projections tracked closely with those already issued by the National Retail Federation, which sees 2.3 percent overall growth.

Iowa State University economist Liesl Eathington indicated the closely-watched holiday forecasts don't carry high stakes for Iowa's economic recovery. She said recent data should yield caution about the condition of Iowa's economy, with nearly 10 percent more households receiving food assistance payments in October than in October 2009, and foreclosrue proceedings initiated on 15 percent more homes in the last three months than in the year-prior period.

Holiday hiring appears to be stronger than last year, when new retail hires for the holiday season were 25 percent below average, Eathington said. That won't matter a lot in the big picture, she added.

“If 2009 is any guide, we probably shouldn't look to the retail sector as a significant job creator during this year's holiday shopping season,” Eathington said.

The ICSC said retail should benefit from an improved weather outlook for the holiday shopping season and better stock market results, even though consumer confidence is weak, unemployment remains high and gas prices have risen. The group even predicted fewer health concerns like last year's big influenza outbreak.

About 31 percent of consumers are expected to shop on the day after Thanksgiving, up from 26 percent last year, ICSC Chief Economist Michael Niemira said.

Gift cards are expected to be the top gift category, overtaking clothing, last year's leader. Clothes are forecast to be the second-highest grossing gift category, followed by toys, music, cash, and electronics.

Retail analyst Dana Telsey said luxury goods have been some of the strongest gainers so far this year, and premium department stores have garnered higher sales increases than mainstream department stores.

Although more luxury goods are sold, Telsey said consumers remain sensitive about price, and are seeking value.

Retailers are succeeding with “high end/low end” strategies in which they offer both good price points at the low end and good value at the high end, Telsey said. She highlighted the success of TJX Companies, with its flagship T.J. Maxx stores, as a case in point.

“Off-price retailers have stepped it up and gotten better brands in the store,” Telsey said.