There are only two months until Christmas Eve and retailers are meeting a more cautious shopper with earlier deals.
Most retailers won’t release their third-quarter results or updated holiday forecasts until just before Thanksgiving, widely considered the most important week of the year for the industry. By then, many shoppers will have already started checking off their holiday shopping lists.
from Amazon October’s Prime Day sales event and ever-earlier Black Friday deals from competitors are grabbing some of the holiday’s wallet share. The unofficial kickoff to the Christmas shopping season comes as executives highlight a bifurcation in consumer spending, with lower-income consumers feeling pressure on their budgets, and as government shutdowns and tariff costs threaten purchasing power.
Kohl’s is among the retailers rushing to do their Christmas shopping early in the hope of increasing their total shopping volume.
“We want to make sure that we approach this knowing that they are buying early,” Christie Raymond, Kohl’s chief marketing officer, said at a media event earlier this month.
The off-mall department store is launching its holiday marketing campaign next week, a week earlier than last year, when it waited until after the election. In the coming days, the rest of the Christmas products that are not yet available in stores will be revealed.
A key part of Kohl’s holiday strategy is attracting shoppers not only early, but often.
Raymond said that during the last holiday season, between November and January, shoppers made “15+ trips” on average to industry stores, but paid with smaller baskets. These results were based on a survey Kohl’s conducted with a third-party research firm.
“[Consumers are] do the work to get what they want at the price they want to pay,” she said.
While Sports and Outdoor Academy CEO Steve Lawrence acknowledged that buyers are savvy when it comes to price monitoring. He said he expects customers to “congregate their spending around key shopping times in the calendar where they know they can get the best deals.”
Kohl’s and Academy Sports are largely aimed at a middle-income shopper. Lawrence nonetheless said consumers are paying close attention to discounted events.
“If we run the same promotion this year as last year, the participation rate will be higher,” he said. “I think it’s a sign that customers are really savvy and figuring out when it’s the right time to make their purchases.”
Change purchasing habits
Lawrence said that while promotions are part of the playbook of every holiday season, Academy Sports will change how it offers discounts this year in light of higher engagement with deals.
“If last year we had a promotion for 10 days, maybe I’ll only do it for 4 days over Thanksgiving weekend,” he said. “Maybe instead of promoting an entire brand, maybe it’s just the key categories of that brand, right? Or maybe in some cases the promotion could be slightly less.”
Raymond said Kohl’s is seeing shoppers looking for lower-priced options and expects that to continue through the holiday season.
“Customers might have been buying a premium brand, but we’re seeing them shift to private labels,” she said. “We think we’re actually in a great position to capitalize on that.”
A private label is a brand designed and sold by a single retailer, which allows greater control over design and, more importantly, cost. This can mean lower prices for shoppers and higher margins for the retailer than a national brand.
Shoppers carry Macy’s and Nordstrom bags at Broadway Plaza in Walnut Creek, California, United States, Monday, December 16, 2024. The Bureau of Economic Analysis is scheduled to release personal spending figures on December 20.
David Paul Morris | Bloomberg | Getty Images
Although Kohl’s doesn’t disclose the proportion of its sales that come from private label, chief merchandising officer Nick Jones said it’s not as high as it once was, adding that there’s room to increase that share this holiday season, especially for shoppers trying to stretch their wallets.
About 23% of Academy Sports’ business is private label, the company said.
“In many cases, [our private label] is our best expression of value,” Lawrence said. “Our goal is to be equal to or better than the best price on any given day.”
However, Lawrence said, innovation must continue to drive sales.
“Cautiously optimistic”
The retail industry has repeatedly described its customers in recent quarters as “chosen,” to indicate thoughtful spending, but also “resilient.” Leaders continue to use these descriptors, or their synonyms, for the upcoming holiday season.
“I think with inflation in certain categories, it puts some pressure on purchasing power,” Lawrence said. “But you know, what we’ve also seen is that customers are very resilient. They’re out during key shopping times. They’re out for Mother’s Day, Father’s Day, back to school. We expect them to come back for the holidays.”
Dick’s Sporting Goods Executive Chairman Ed Stack told CNBC this week that he thinks the consumer is “a little stressed” this season, but is “cautiously optimistic.”
“If you want to provide value to the consumer, and they can see it, feel that value – and I don’t mean from a price point of view, this could be an innovation… then they will come and they will buy,” Stack said.
Executives at all three retailers agree that holiday inventory will be normal, despite pricing uncertainty that many feared would affect order volumes. None of the three expected a shortage of goods.
“I don’t think [inventory availability] is going to be different than it has been in the past,” Stack said. “That really super hot item that everyone wants? This will probably be rare, like every year. »