Retailers Expand Playbooks

New Incentives, Deals Aim At Cautious Shoppers

By Becky Yerak
Tribune staff reporter
Published November 26, 2004

Since starting her holiday shopping a few months ago, Justine Nagan has scoured outlet malls, department stores and small shops.

The associate film producer, however, is being more discriminating about one thing this year: her budget. "I usually spend between $500 and $800" on gifts, said the Chicago resident, who expects to wrap up shopping in early December. "This year it'll be a lot less."

The 26-year old, who recently earned a master's in film studies from the University of Chicago, is factoring student loans into the equation. While buying rhinestone brooches and books, she's also planning to make some presents.

Nagan's not the only one watching her wallet more closely. More shoppers have turned cautious as the holiday shopping season gets under way.

Nearly a third of shoppers plan to spend less on gifts compared with last year, according to the latest monthly survey of 4,000 primary household shoppers by Retail Forward. That's up five percentage points from the consulting firm's previous survey.

There's still hope, however. The latest survey was conducted in late October, just as the U.S. presidential election was reaching fever pitch. Now that the outcome is known, consumer optimism could be sparked, Retail Forward said.

The National Retail Federation expects 2004 holiday sales to rise 4.5 percent to $219.9 billion. In 2003, holiday sales grew 5.1 percent, the biggest growth spurt since 1999, the trade group said.

Taking nothing for granted, retailers ranging from Casual Male Retail Group Inc. to Circuit City Stores Inc. to Home Depot Inc. are trying new tactics to stoke spending. They're doing everything from improving their online shopping experiences to mounting Spanish-language marketing campaigns to stocking more impulse items.

Take Abt Electronics & Appliances in Glenview.

For the first time, the upscale retailer, whose products include an $8,000 Sub-Zero freezer, is carving out a small area of its store to sell "lower-priced stuff that's a good deal," President Mike Abt said. Citing the growing popularity of such buying clubs as Costco Wholesale Corp., Abt wants to broaden its customer base by carrying such items as $19 sandwich makers and $100 DVD-VCR combo units.

Even dollar stores are more sensitive these days.

On Saturday, for the first time, Dollar Tree will give 10 percent discounts to shoppers spending more than $20. The chain also noted that more than 1,200 of its stores will be open Thanksgiving, a 20 percent increase from the 1,000 open in 2003.

Sears, Roebuck and Co. is tripling the number of items on sale compared with last year and is doling out $10 gift cards to the first 200 shoppers in each store.

The mother of all retailers, Wal-Mart Stores Inc., is offering deals on Friday that'll put a smile on cost-conscious shoppers' faces. One example: a 20-inch flat-screen TV with built-in DVD player for $140.

Disney Stores are offering more extended deals this year to compete for early birds. Its Nemo Plush Doll, regularly priced at $16.50, will be discounted on Friday to $7.99. Show up between 5 and 10 a.m. Friday, and get an additional 20 percent off everything in the store, including the $7.99 Nemo.

Can't make it to Disney until Saturday or Sunday? Nemo Plush can be had for $9.99. In contrast, last year, it would have reverted to $16.50 on Saturday.

Other retailers' changes this season center around the online shopping experience.

In recent months, Circuit City and Home Depot have redesigned their Web sites to make it easier to search.

Also, for the first time, Home Depot shoppers who buy a live Christmas tree online can have it delivered to their door.

Meanwhile, Sears' online site now allows shoppers to search for gifts by price and gender. The Hoffman Estates retailer also will offer free shipping on most online products less than 70 pounds that are bought before Dec. 21. Last year's deadline was Dec. 18.

It's also the first holiday season in which Ace Hardware will allow shoppers to order online and pick up at the store.

"Some people get nervous about having things shipped to their home," said Paula Erickson, spokeswoman for the Oak Brook cooperative. "Some of the items that people order online require assembly, or people want advice about the product."

But retailers aren't neglecting those who like perusing catalogs, either.

"We sent out a gift-buying guide, which we've never done before, to 300,000 customers who have at least a female-sounding name," said Jeff Unger, investor relations director for Casual Male. The big and tall men's chain also is throwing in a $20 coupon.

Meanwhile, Home Depot is raising the circulation of its holiday gift catalog by 20 percent, to 6 million from 5 million in its 2003 inaugural year.

Circuit City and Target Corp. are among the retailers testing new marketing.

Target is giving wake-up calls to shoppers from such celebrities as Heidi Klum and Ice T.

Circuit City has launched a series of commercials from a new adagency and is doing Hispanic-language marketing for the first time, spokesman Steve Mullen said. The chain is carrying a wider range of gifts, including $10 to $30 gadgets such as talking pedometers and heated travel mugs that display the coffee's temperature.

For better-heeled shoppers, Circuit City is the exclusive big-box retailer for Oakley Thump, featuring an MP3 player built into sunglasses for prices starting at $395.

"We launched those four days ago," Mullen said. "They're drawing a lot of interest."

©2004, Chicago Tribune