With just two months until Christmas Eve, retailers are responding by offering early deals to more cautious shoppers.
Most retailers don’t release third-quarter results or holiday forecast updates until just before Thanksgiving, which is 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.
Amazon’s October’s Prime Day sales event and competitors’ earlier Black Friday sales than ever will take away some of the holiday wallet share. The unofficial kickoff to the holiday season comes as executives point to a polarization in consumer spending as lower-income consumers feel strained household budgets and government shutdowns and tariff costs threaten purchasing power.
kohls Retailers are targeting the holiday season early in hopes of increasing overall sales.
“We recognize that our customers are shopping early, and we want to make sure we’re driving early consideration,” Kohl’s Chief Marketing Officer Christy Raymond said at a media event earlier this month.
Department stores outside shopping malls will begin their holiday marketing campaigns next week, a week earlier than last year, when they waited until after the election. The remaining holiday products not yet in stores will be released in the coming days.
A key part of Kohl’s holiday strategy is to attract shoppers not just early but often.
Raymond said that during last year’s holiday season, which ran from November to January, shoppers made an average of “more than 15 trips” to stores across the industry, but they checked out smaller baskets. These findings are based on research conducted by Kohl’s with a third-party research firm.
“(Consumers) are working hard to get what they want at the price they want to pay,” she said.
meanwhile Academy Sports and Outdoors CEO Steve Lawrence agreed that shoppers are savvy when it comes to price monitoring, saying he expects customers to “tally their spending around key shopping moments on their calendars when they know they’re going to get the best deals.”
Both Kohl’s and Academy Sports primarily cater to middle-income shoppers. Still, Lawrence said consumers are paying close attention to discount events.
“If we run the same promotions this year as we did last year, we’ll see an even higher acquisition rate,” he says. “I think this shows that customers are really smart and understand when is the right time to shop.”
Changes in shopping habits
Lawrence said that while promotions are part of its strategy every holiday season, Academy Sports will be tweaking the way it runs discounts this year given the increased interest in the deal.
“If I ran a promotion for 10 days last year, I’ll probably only run it for four days over Thanksgiving weekend,” he said. “Maybe instead of promoting the whole brand, you might just promote the main categories within that brand. Or maybe you promote it at a slightly lower discount.”
Raymond said shoppers at Kohl’s are reaching for lower-priced items and expects that trend to continue during the holiday season.
“Customers may have been buying premium brands, but we’re seeing them switch to private labels,” she says. “We think we’re in a great position to take advantage of that.”
Private labels are brands that are created and sold exclusively for one retailer, giving you more control over design and, importantly, cost. This can mean lower prices for shoppers and higher profit margins for retailers than national brands.
Shoppers carry Macy’s and Nordstrom bags at Broadway Plaza on Monday, December 16, 2024 in Walnut Creek, California, USA. The Bureau of Economic Analysis is scheduled to release personal spending statistics on December 20th.
David Paul Morris | Bloomberg | Getty Images
Kohl’s doesn’t disclose the percentage of its sales that private labels account for, but chief merchandising officer Nick Jones said it’s not as high as it used to be, adding that there’s an opportunity to increase that share this holiday season, especially for shoppers looking to stretch their wallets.
The company said about 23% of its Academy Sports business is private brands.
“In many cases, (private label) is the best expression of our values,” Lawrence said. “Our goal is to beat or beat the highest price of the day.”
But Lawrence said innovation must continue to stimulate sales.
“Cautiously optimistic”
In recent quarters, the retail industry has repeatedly described its customers as not only “selective,” meaning they spend wisely, but also “resilient.” Management will continue to use these descriptors, or their synonyms, for the upcoming holiday season.
“I do think there is some pressure on spending power due to inflation in certain categories,” Lawrence said. “But what we’ve seen is that our customers are very resilient. They’re always out during key shopping hours. They’ve been here for Mother’s Day, Father’s Day, back-to-school. We expect them to come back for the holidays.”
dicks sporting goods Chairman Ed Stack told CNBC this week that he thinks consumers are “a little stressed” this season, but is “cautiously optimistic.”
“If you’re going to provide value to the consumer, and the consumer can see it and feel that value, and I’m not talking from a price standpoint, it can be an innovation…then the consumer will come and buy,” Stack said.
Despite the tariff uncertainty, which many feared would impact order volumes, executives at the three retailers agree that holiday availability will be normal. None of the three expected the product shortage.
“I don’t think (inventory conditions) will be any different than in the past,” Stack said. “That super popular item that everyone wants? It’s probably going to be in short supply every year.”
