IE 11 is not supported. For an optimal experience visit our site on another browser.

Higher energy costs a wildcard for retailers

As pump prices have fallen in the past few weeks, hopes for a solid holiday shopping season have rebounded.  By John W.  Schoen
As usual, toys are one of the biggest gift categories -– showing up on 45 percent of all consumers' shopping lists, according to the National Retail Federation. Rick Bowmer / AP
/ Source:

You’ve laid out the money for supplies and rounded up some extra help to serve up the goodies. You’re expecting a crowd to show up, but all it takes is a little bad weather to keep some people home. And, as in years past, you won’t really know until it’s all over just how well your plan succeeded.

If you’re a retailer these days, you have a lot in common with other holiday hosts. And while this year’s high gas prices and consumer jitters appear to be abating, the retail industry won’t know for another month or so whether they bet right when they stocked up months ago for the upcoming shopping season, which traditionally kicks off Friday. If they bet right, they’re looking at one of their best holidays in years. If they bet wrong, you can expect big bargains at year-end sales.

A big wildcard in this year’s bet: rising energy prices. After back-to-back hurricanes knocked out U.S. refiners, a spike in pump prices gave retailers a scare last month, along with a slump in consumer confidence. But as pump prices have fallen, hopes for a solid season have been building. Now, retailers are hoping to front-load the shopping season -– before consumers get socked with winter heating bills, which are expected to run as much as 50 percent higher than a year ago.

Now hiring
To get a jump on the competition, many retailers have moved early to hire extra help to move merchandise.

“Retailers have realized that they have to get people into stores before those energy bills come in,” according to John Challenger, chief executive of the employment firm Challenger Grey and Christmas.

But don’t expect to see a flurry of sales clerks eager to help when you walk in the store.

“The majority of hiring will be on the back end -- at call centers, warehouses and shipping and distribution centers,” according to Manpower spokeswoman Lisa Tagliapietra. “These areas are critical because of heavy catalog and online shopping that occurs. Hiring in these sectors usually gets going early, around the end of the third quarter.”

Wal-Mart, the nation’s largest retailer, kicked off the season especially early this year, with a holiday ad campaign that rolled out Nov. 1 -– the earliest in the company’s history. After disappointing sales last year -– blamed in part on keeping prices too high -– the retail giant announced that it will match any price for an identical product featured in a print ad from a local competitor. Target and Best Buy are also rolling out early, aggressive ad campaigns, according to industry analysts.

The holidays may not be as cheerful for apparel retailers Limited Brands and The Gap, which have been struggling with sluggish sales for the past several quarters. Earlier this month, The Gap posted a 20-percent drop in third quarter profits. Limited posted flat sales and losses for the quarter.

What's hot
With the economy in relatively good shape, shoppers are feeling relatively cheerful -– planning to spend and average of $681 each this holiday, up $26 from last year, according an annual holiday spending survey by NPD Group, a market research firm. (Those with kids report they plan to shell out $777 – up from $608 last year.)

As usual, toys are one of the biggest gift categories -– showing up on 45 percent of all consumers' shopping lists, according to the National Retail Federation. For girls, Barbie’s rein as top doll is seeing a strong challenge from a doll line called Bratz -– billed as a hipper alternative with better fashion sense. Boys are relentlessly plugged into video games, with both games and consoles expected to be on the Top Ten list, along with classic action heroes like Spiderman, Batman and the cast of Star Wars.

For grownups, clothes are expected to be top-sellers, including sweaters and slippers to help ward off the winter chill after turning down the thermostat. Movies, books and music are other popular items, showing up on more than a third of all shopping lists among those surveyed by NPD.

Merry click-mas
And while retailers are once again expecting solid foot traffic on Black Friday -– the store stampede that traditionally comes the day after Thanksgiving -– more and more shoppers are skipping the traffic jams at mall parking lots in favor of clicking their way through their gift list.

“Cyber Monday,” the day shoppers weary of too many relatives at home return from a few days off to their office computers, is fast becoming one of the biggest days of the year for online shopping, according to, an online retail trade group. Some 89 percent of retailers told the group they saw a substantial increase in online sales on the Monday after last Thanksgiving. And more than a third of shoppers say they’ll browse or buy online again this year. (About half of those said they’d do their gift surfing during work hours.)

Expectations among online retailers are high this year: more than half are looking for sales gains of 30 percent over last year; one in five say they expect to book gains of 75 percent or more, says. And to get their jump on store outlets, many retailers are planning to begin promotions online starting Thanksgiving day, when most malls are closed.

Something to consider when the food’s all eaten, the relatives have finally left, and you‘ve got better to do.