Forecasters predict slight uptick in holiday spending
Holiday gift spending won’t come close to pre-recession levels, but national and state shopping forecasts predict that 2010 will be a little better for retailers than the last two years.
A St. Thomas Opus College of Business survey revealed that Twin Cities shoppers plan to spend 6.8 percent more than they did in 2009 and a National Retail Federation Survey predicted they plan to spend 2.3 percent more.
Some of the trends in this year’s predictions are welcome news for small, independent Southwest retailers who have suffered in recent years. The NRF’s Holiday Consumer Intentions and Actions Survey shows that people this year are more likely to pick a store that is friendly, helpful and sells high quality merchandise — characteristics many Southwest retailers pride themselves on.
“That’s exciting news,” said Lisa MacMartin, co-owner of Wonderment toy store at 4306 Upton Ave. S.
MacMartin, however, is being conservative in her own forecast this year. The last couple years have been tough. She and her business partners opened a second store in St. Paul right before the recession hit in 2008, and now they’re tasked with attracting shoppers in Minneapolis without the Linden Hills Co-op down the block.
“I think that it’s no secret that retail generally has been quite hard-hit, and it in terms of talking with colleagues and our experiences, it’s continuing to be quite a struggle,” she said. “We’re not seeing a resurgence in our business yet. We have hopes of that happening soon, but for this Christmas we’re being quite conservative in our projections.”
Holiday shopping took a nosedive in 2008. The same St. Thomas survey in 2007 predicted households would spend $751 on holiday shopping. In 2008, that number fell to $663 and in 2009 it dropped to $637. This year, however, households are expected to spend $680, a number many hope signals the slow climb from recession.
While the majority of shoppers identify sales and price discounts (42 percent) or everyday low prices (13 percent) as the most important factors in deciding where to shop, customer service and quality merchandise are slowly gaining momentum, according to the NRF study.
According to the survey, 5.3 percent of shoppers identified customer service as the most important factor in shopping, up from 4.4 percent in 2009 and 3.7 percent in 2007. Quality merchandise was chosen by 12.7 percent of respondents, up from 11.8 percent in 2009 and 8.7 percent in 2004.
It seems customer service is even more important to young people, as 10 percent of those ages 18 to 24 identified it as the primary factory for choosing a store.
“I honestly believe, and I’ve believed it for many, many years — I’ve been in business for 35 years — that distinctive product, excellent service, fair pricing, a beautiful new store, will generate a loyal following,” said Darrel Besikof, who owns Bay Street Shoes in Calhoun Square with his wife Shelly.
Besikof’s business has been hit hard the last couple years because not only did retail sales plummet in 2008 and 2009, Calhoun Square was in the midst of a major renovation that had shoppers fighting construction to get to their favorite stores in the mall.
He predicts a strong holiday shopping season in 2010, now that the mall is all but done with renovations and many new stores and restaurants have moved in.
“We’re getting back to people who we’ve missed for a long time and we’re getting new people,” he said.
But Besikof predicted this year’s business still wouldn’t match sales numbers from before the recession and construction.
The same is true for Wonderment, MacMartin said. She and her co-owners, Zuzanne Fenner and Joyce Olson-Kapell, rely on their experience as mothers to relate to their toy-shopping customers.
They continue to host crafts classes and parenting talks at their store. This year, they’ve introduced the Wonderment Buyers Club. Shoppers can sign up for a card that is kept in the store. After six purchases with the card, shoppers will get 10 percent of their total purchases back that they can use for store merchandise.
“That’s been really well received,” MacMartin said. “It’s given us a chance to talk more with our customers and it’s kind of nice. We get to know them better because we exchange names.”
Wonderment and other small retailers say they’re using social networking more this year because it’s an affordable way of attracting shoppers. B-Squad owner Betsy O’Connor said she’s using Facebook now to promote new merchandise she is selling in her store.
B-Squad, 3500 Nicollet Ave., sells vintage clothing, vinyl, electronics and furniture.
NRF’s survey shows that 11.9 percent of shoppers will buy gifts from a resale or thrift store this season. It only began asking shoppers that question last year, which illustrates O’Connor’s point about how much popular resale shops have become recently.
Another trend over the past decade has been the increase in online holiday shopping. This year, according to the St. Thomas study, shoppers plan to spend 22 percent of their holiday budget online, which is consistent with last year but up from about 7 percent in 2002.
Magers & Quinn, 3038 Hennepin Ave., began selling books online about five years ago, said David Enyeart, events coordinator at the bookstore. That has been a factor in the store’s consistent sales increases over the past three years despite the recession.
“It’s a good solid percentage of our sales,” he said. “It’s a nice core business that really helps.”
But other factors, like Borders Books departure from Uptown, new stores around Hennepin & Lake and ramped up book signings in Magers & Quinn also played a role.
As Besikof points out, national surveys may mean more to national retailers with 100 stores as opposed to a small business that is more affected by what’s going on next door. “The macro trends don’t mean as much to me as my own little sphere,” he said. “But things are definitely picking up over here.”
Reach Nick Halter at [email protected]