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Hope for the Holidays

To entice shoppers to spend money in their stores as they run from work to holiday parties to the mall, retailers will have to make holiday shopping as convenient as possible this year.

While the 2004 holiday shopping season officially beginning Nov. 26, the day after Thanksgiving is expected to be better than last year, retail analysts expect consumers to shop in fewer stores and buy more gift cards than ever before.

Aubie Goldenberg, a partner in the retail group of Ernst & Young in Los Angeles, said, “I have seen some folks start their holiday promotions as early as September.”

Goldenberg added, “A lot of people you ask are completely annoyed that the retailers are starting in September, but the shoppers are buying.”

While holiday sales in the United States were up 5.7 percent in 2003 over 2002, Ernst & Young is predicting a 6 percent increase this year, which Goldenberg called a small increase.

“We have seen things soften a little bit,” he said, on top of high gasoline prices and rising interest rates.

The holiday shopping season seems to already be going very well for Geppetto’s: A Child’s Fantasy, a San Diego chain of five specialty retail stores.

According to Geppetto’s owner Brian Miller, October sales were 17 percent ahead of October 2003, and many shoppers last month indicated that they were already shopping for Christmas presents.

Geppetto’s expects a 20 percent increase in same-store sales in November and December, compared with the same period last year. Based on last month’s sales and considering November purchases, Miller said, “I think it might be attainable.”

In addition to special orders with free shipping and free gift wrapping, Geppetto’s makes shopping in its specialty toy stores more convenient by helping customers find the perfect gift, Miller said.

“We try to pride ourselves on knowing about the products we sell and we make recommendations,” he said.

In its annual holiday shopping survey of almost 16,000 consumers, accounting and consulting firm Deloitte & Touche LLP USA found that 71 percent of households nationally and 72 percent of Southern California shoppers planned to spend as much or more on gifts this holiday season than they did last year.

As a result, Deloitte is projecting a 5.5 percent increase in November and December sales.


Spending More

While 66 percent of the consumers surveyed said they will shop at fewer stores, they plan to spend more money at those locations.

“Shoppers are looking for convenience and ease of shopping,” said Theresa Drew, Deloitte’s managing partner in San Diego.

That’s why gift cards will be such a big factor this year, Drew said. Not only do they draw customers into stores by giving them an easy gift idea, but they bring shoppers back in January to redeem the cards.

For the first time, according to Deloitte’s research, gift cards will replace apparel as the most purchased holiday gift in 2004. Of the surveyed shoppers, 64 percent said they’d buy gift cards, up from 60 percent in 2003. Consumers said they’d spend more on gift cards than clothing, music or other gifts.

The bonus for retailers in January is that shoppers redeeming gift cards tend to spend up to 20 percent more than the gift card amount, Goldenberg said.

Mikaela Seronello, the Horton Plaza store manager for Origins, a makeup and skin-care store, said the retailer does not heavily promote its gift cards because it prefers to have its employees help customers find a gift. For businesses, Origins has a corporate gift-giving program with free gift wrapping and delivery.

“It’s convenient for businesses and a little more personal too,” Seronello said.

Owned by New York-based cosmetic company Estee Lauder Inc., Origins has three stores and sells its products from six counters in department stores in San Diego County.

Seronello is optimistic about sales this year.

“We’re seeing people earlier and they’re spending more money,” she said.


Advanced Marketing

Swedish furniture retailer Ikea started advertising holiday deals in San Diego on Oct. 21, according to Kathleen Cunningham, the president of San Diego-based Advanced Marketing Strategies.

Advanced Marketing Strategies works with retailers and other clients to market and advertise their stores, products and services. Its local clients include Ikea and the Mossy Automotive Group.

“They’re trying to take advantage of the spending frenzy that begins on November 26,” Cunningham said.

To draw customers, both businesses have extended shopping and service hours and are offering special items and discounts. Ikea provides gift-giving ideas in its advertising and highlights a featured item each week.

Mossy’s car dealerships are selling gift cards for automobile parts and service. The company is also offering to shuttle customers to area malls while their vehicles are being maintained at its service centers.

“They’re taking advantage of the season when the purse strings are loosened,” Cunningham said.

Seronello said Origins won’t do much advertising for the holidays, except for some newspaper ads in major markets, such as Southern California.

“We have been focusing this year more on sending catalogs to our customers,” Seronello said. “We haven’t had as much print advertising as in the past, but we have a new line (of products) this year that has gotten a lot of press.”

The Origins Web site also helps direct customers to its stores, she said.


Online Sales

Goldenberg said Ernst & Young is forecasting a 15 percent to 20 percent increase in Internet sales. He noted online sales may not hurt stores. If shoppers buy books from Internet-only retailer Amazon.com, it takes business away from bookstores such as Barnes & Noble. But if the shopper buys from Barnes & Noble.com, it helps that retailer’s overall bottom line, he said.

“There’s a lot of debate over the busiest shopping day of the year. The Monday after Thanksgiving is a very busy day for Internet shopping because people saw what they wanted in the stores over the weekend but it was all sold out,” Goldenberg said.

San Diego-based Run to the Store.com is relying on a public relations campaign to get the word out about the new shopping Web site, which donates some of its profits to charity.

“We’re spending some money on public relations now to get people to bookmark the site all year,” said Alison Reid, founder and charity coordinator for Run to the Store.com.

The Web site is an online mall with links for several retail sites in one place. It gives shoppers leads on Internet shopping specials, such as free shipping. In return for shopping at those stores from Run to the Store.com, retailers pay the Web site a commission.

Reid said up to 30 percent of the site’s profits, based on the compensation from retailers, will go to charities. The company is still putting together a list of organizations that will benefit from the site and is soliciting suggestions from shoppers.

“The Internet is still holding its own from year to year,” said Drew of Deloitte & Touche.

During the last few years, consumers have done about 20 percent of their shopping online, according to Deloitte’s data.

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