For many Americans, it's going to take more than an elaborately decorated department store window to get them to part with their money this holiday season.
Something like a 75 percent off coupon from CouponCabin.com, perhaps? Or maybe a $7,000 handbag marked down to $350 on Gilt.com?
Yet even as consumers migrate to online discount sites and big-box stores, many retailers spend hundreds of thousands of dollars creating elaborate window displays with little evidence they do much if anything to boost holiday sales.
Saks Fifth Avenue, for example, spent more than $350,000 on decorating 16 different windows with one-of-a-kind designer frocks by Proenza Schouler, Oscar de la Renta and Alexander McQueen and gigantic projectors displaying images of snowflakes onto the façade of the building, said Jacques Rosas, chief executive of Shop Studios, a window display company in New York.
Experts say it's hard to tell whether retailers get a good return on such investments – and there is plenty of reason to think fancy windows draw mainly gawkers rather than shoppers.
“Unless you are telling me that dress in the window is $100, I’m not going into the store to buy anything,” said window-shopper Jennifer Munro, who was enjoying a display at Saks Fifth Avenue in New York. “I come here mostly to get into the holiday spirit, but most of my shopping takes place online. That’s where all the deals are.”
So why do retailers still do it?
Perhaps it is a sense of tradition. Holiday windows date back as far as the 1840s, when stores decorated their windows with evergreen and wrapped gifts. In the 18070s L.P. Tibbals' toy store installed mechanical steam toy trains for the public to gape at, and Macy’s spent close to $10,000 decorating its holiday windows with imported dolls.
But a more likely justification for spending on windows is that retailers hope to drive positive word-of-mouth – including on blogs and websites that cover retailing like trendhunter.com.
“When it’s all finished, I like to stand outside and listen to what the crowd is saying about the windows,” says David Hoey, “window master” and senior director at Bergdorf Goodman, which has some of the most buzzworthy windows of the season.
“Ninety-nine percent of the time they aren’t saying anything because they are all bloggers and they are uploading images to their sites and typing away on their smart phone keyboards. And that’s the kind of excitement I am happy with.”
Bergdorf, known for its baroquely opulent displays, spent close to $300,000 installing two tons of quartz crystal, dressing the mannequins in designer duds and flying in real antiques from overseas for its “Wish You Were Here” themed windows at its flagship store. The windows take a whimsical and detailed look at what space travel might have looked like to people imagining it more than a century ago.
Terron Schaefer, chief creative officer at Saks, estimates nearly a million people a day will walk by the holiday windows at the luxury retailer this season, versus 400,000 to 500,000 on a regular day.
“Our store windows read like a look-book come to life,” said Schaefer. “We made sure to include gifting items in the windows so when people walk by they can get ideas on what to give.”
Schaefer said, however, that the top-selling gifts at Saks Fifth Avenue don’t necessarily include the “fantasy” items in the window, but more affordable items such as the Saks Fifth Avenue branded items.
For example, private label cashmere sweaters for men and women, as well as makeup gift sets and fragrances ranging from $50 to $175, are all in high demand, but not displayed behind the glass panes.
Likewise, a store sales associate at Neiman Marcus' flagship store in Dallas said that despite the consistent pedestrian traffic outside the store, sales of high-end apparel and home items have been mediocre.
“It’s pretty much a ghost town, especially when you get to the home goods and higher-end apparel floors,” said the associate, who requested anonymity. “Everyone comes to look at the windows and then leaves. Prices are still too high for them to buy anything.”
Brian Sozzi, equity analyst at Wall Street Strategies, pointed out that websites with large pictures of merchandise, zoom capabilities and what seems like a limitless amount of product have taken over the role that store windows used to play years ago.
“Trust is a big factor when it comes to online shopping,” says Sozzi. “Retailers who engage in an 'interconnected retail experience' and make the customer feel like they haven’t left the experience of being inside the store walls, even though [the customer is] surfing the site, are the ones that will retain their customers both on and off line.”
Clearly retailers have absorbed this message. Macy’s Saks and Neiman Marcus all have reported strong sales growth recently and have credited online sales, among other factors. Macy’s chief financial officer referred to the company’s digital marketing strategy including the aggressive use of social media.
Macy's holiday window display, an adaptation of “A Miracle on 34th Street” is part of a campaign including an animated network special, a balloon in the Macy’s Thanksgiving Day Parade and videos on YouTube. The mission is to inspire a sentiment of hope and excitement during a down economy.
“When the mayor of New York says, ‘If you haven’t seen Macy's you haven’t seen New York,'” you have a lot to live up to,” said Martine Reardon, executive vice president of marketing for Macy’s. “Our store is just as much a destination in the city as the Empire State Building and Central Park during the holidays, and we want to feed the excitement.”