T.M.X. Elmo
Business Wire file
After several years without a must-have toy, toy retailers are rejoicing over the new T.M.X. Elmo.
updated 10/19/2006 11:48:10 AM ET 2006-10-19T15:48:10

The holiday season is always a nail biter, and this year won’t be any different.

Toy sellers are rejoicing over T.M.X. Elmo, after several years without a must-have toy. And department stores, which have been the holiday losers over the last several years, are winning back customers with better merchandise and marketing.

Three industry experts offer their predictions for the season, from hits in accessories like wedge boots, mini handbags and iPod holders to how department stores like Macy’s will win over customers.

Q: What is your general sense of how consumers will behave this holiday season? Any forecasts?

Wendy Liebmann, president and founder of WSL Strategic Retail, a marketing consulting firm:

“Consumers at the moment are of two minds...There is this inherent feeling at the moment that things might be all right for the holiday so they are thinking of spending a little more... But there is a concern about mortgage rates, house values.”

I think one of the factors that is very important is that people feel they are not in control of very much anymore. So there is a real opportunity for what I call the carpe diem effect. That is, in the end, they are going to say: ‘Let’s just have a good Christmas.’”

Dana Telsey, CEO and founder of Telsey Advisory Group, an independent research firm:

“It is going to be pretty good...We think it is going to be [up] four to six percent ... Lower energy prices really do help. People talk about housing having an impact... We believe that what impacts consumers’ wallet today is what they look at and that is energy prices.”

David Wolfe, creative director at Doneger Group, a buying office:

“Consumers are in a good mindset to enjoy the holiday and spend at least as much as they spent last year. Unfortunately, from my specialized tunnel vision perch looking at fashion, I think it is going to be a disappointing season, at best OK, because I think consumers are spending less and less on apparel. It is no longer considered a gift priority because there are so many other options. The perfect sweater now turns out to be the Christmas iPod.”

Q: Will consumers shop later this holiday season than last year? Toy sellers are already reporting a pickup in customer traffic due to the buzz surrounding T.M.X. Elmo.

Liebmann: “It is going to be a very early and very late season. They’ll be out very early looking for the hot items because they already know some of them are out there... Toys is a perfect example, but electronics is another... And then they are going to hold off, hold their breath, sit on their wallets until the very last moment when they can get the very best deals.”

Telsey: “Last year, Hanukkah started on December 25, that evening, with December 26 the first day. This year, Hanukkah starts on Dec. 15, that evening. Hopefully, that will help a little bit. Consumers are procrastinators and they do delay. And that is why we see the ever-increasingly popularity of gift cards. Gift cards are extending the holiday season past December and into January.”

Q: With no must-have item in apparel popping up so far this season, it looks like accessories will once again be the star performers. Which will do well?

Liebmann: “We haven’t had a hot item in fashion for the holidays in ages. What they will go for are leggings, which anybody can wear, boots...belts. Gloves, I think, are the other item.”

Telsey: “Wedge boots, layering, skinny jeans are some of the key items that everyone is focused on lately, and those will be the ‘it’ items. But you are still seeing handbags quite strong... For many of these leather goods companies, it isn’t just the handbags. But it is accessorizing those handbags whether it is with an iPod holder, key rings, cosmetic case. It is accessorizing accessories.”

Wolfe: “Handbags — both satchel and the tote — are going to be really good. But watch out for the mini handbags to be a dark horse performer. Stores love it because they are selling two handbags — you have to buy a big handbag to put it into... Headbands are going to be red hot.”

Q: What will be the sleeper hits?

Liebmann: “I have seen and heard this buzz [around] Zeno Acne product. You just apply it to wherever and it kind of takes it away.”

Telsey: “Some of them will come from consumer electronics... Some of it is going to continue to come from accessories... I think the creativity of the accessories world to create need from want has been very impactful.”

Wolfe: “Leggings...just everybody is going to realize that it is the hot fashion thing.”

Q: Which stores will do well?

Liebmann: “Discounters will do relatively well because I think people will still be trying to stretch their dollars... I think, surprisingly, department stores will do well... I think electronic retailers...will do well.”

The struggle is going to be some of the specialty apparel stores... Everybody is going to have leggings. Everybody is going to have boots. Everybody is going to have squishy bags.”

Telsey: “Right now, the department stores and the discounters have reinvented themselves... And so the increase in advertising dollars by these companies will certainly be a key driver in attracting more customer traffic.”

J. Crew will do well...Also, Abercrombie & Fitch should have a good Christmas season. Electronics should do well with continued enhancements in iPods, flat-panel TVS, lower prices on some of those consumer electronics and the whole service aspect... Coach should do well. Tiffany should have a good season. Burberry. Louis Vuitton.”

Wolfe: “This is the first Christmas season we have a new Macy’s, and I think there is a lot of buzz suddenly. People who never were able to be part of the Macy’s tradition at Christmas are going to find themselves there. I think Macy’s is doing a good job in reinventing itself.”

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