Back to Basics
Animal print cashmere is out, and the warm, familiar chenille sweater is in. The clamor for pricey fragrances and upscale novelty gifts is fading as the demand for wrinkle creams and bed comforters climbs.
The pendulum has swung once again. Consumers who opted for the unique and upscale a year ago are now snapping up more practical items with lasting value this holiday season.
There are exceptions, of course. The cigar fad is ushering in a boom in extravagant stogie accessories, such as $3,000 humidors. And the toy market is still trendy. (Sing and Snore Ernie has snatched the sales crown from toy mate Tickle Me Elmo. Is there a Wink and Whistle Bert in the works?)
With value in vogue, however, home furnishings are hot, practical clothing is popular, and there’s a seasonal surge for investment-grade jewelry and for useful gizmos such as cell phones and multiple-function watches.
“Consumers want the practical, and they want to save money,” said Kurt Barnard, a New Jersey economist who publishes the Barnard Retail Trend Report. “The baby boomers are aging, and these people are spending proportionally more on home enhancement than on preening.” As the holiday season winds to a close, many merchants are hoping to lure shoppers with store displays of better-selling merchandise. The economy is strong, but industry analysts said cautious consumers want more for their money partly because personal debt is high.
Merchants are prepared to make adjustments. Retailers now have swifter systems for replacing merchandise and have recently acquired technology that tracks sales more closely and more quickly.
Holiday season sales will rise a modest 3% to 5% nationally and regionally, industry analysts said. However, many merchants may have to hold profit-trimming pre-Christmas clearances to generate such an increase if they don’t find more hot sellers over the next seven to 10 days.
Sears, Target, Mervyn’s and Kmart are among the chains that have identified home furnishings and household appliances as strong sellers. They cite a surge in sales of items such as towels, bedding and bread-making machines.
Consumers, Barnard said, are choosing jewelry for the same reason they’re buying home furnishings and small appliances.
“Jewelry gives you something that endures,” he said. “It has long-term value. It’s also a form of investment.”
The Tiffany & Co. store at South Coast Plaza in Costa Mesa and Beverly Hills jeweler Martin Katz are among those experiencing a seasonal spike in sales. Katz said demand for items such as diamond ear studs priced from $10,000 to $35,000 has resulted in a tripling of holiday season sales.
Like jewelry, apparel is usually a big seller during the holiday season. Last year, for example, there was a rush on animal print styles in various fabrics.
Consumers, however, appear to be favoring the utilitarian this year. For example, sweaters in warm chenille pile or comfortable crushed velvet are popular at chains such as Macy’s. Also, sales of casual clothing and upscale sportswear are strong, but demand for dresses and many men’s lines have been lower than expected nationwide.
In the Southland, the trench coat has made a comeback. Confronted with the prospect of El Nino-driven storms, shoppers are snapping up trench coats at stores such as South Coast Plaza’s Burberry’s, where one popular coat sells for $750.
Holiday season interest in the Seiko message watch has also been a regional phenomenon. Introduced in the Southland a year ago, the watches have a pager function and provide weather forecasts, stock market closings, sports scores and lottery results. Seiko introduced three new versions of the watch for the holiday season, ranging from $119.95 to $189.95.
Seiko has more than doubled its distribution of the watches and is ringing up sizable sales increases this holiday season, said Seiko spokeswoman Dianna Schmid.
Another mobile communications device--the cellular phone--is also popular with gift givers. Cell phone firms typically sell their products and services at their own stores or through dealers of wireless products. However, AirTouch Cellular recently began to ship a new phone package to some department stores and other retail chains.
Prepaid phone cards are one of the new AirTouch options. Also, the company’s new phone packages sell for $99 or $129--cheaper than the prices earlie this decade.
“These products have appeal because it’s a new technology for many, and the lower price is generating mass appeal,” said Ira Kalish, a Los Angeles-based economist at Management Horizons, the retail consulting arm of Price Waterhouse.
Kalish said products with an entertainment tie-in are also popular. That would account for the demand for the “Anastasia” music box, selling for $39.95. The box, which features small, waltzing versions of the film’s czar and czarina, is the best-selling item at San Francisco Music Box stores nationwide.
Entertainment products such as CDs, videos and video games are traditional holiday season favorites. Riven, a computer video game sequel to the popular Myst game, is selling fast at Software Etc. at the Northridge Fashion Center and nationwide.
As for unconventional gift categories, cigar accessories are among the most popular. Cigar sales are up 151% this year, and more companies are taking advantage of the trend.
For example, First USA, a Wilmington, Del.-based company, has issued special Visa cards that allow card members to get free handmade cigars and to buy cigar accessories such as humidors and cutters at discounts from companies such as Prometheus International, based in the city of Bell.
Prometheus, which sells humidors priced from $595 to $3,000 and lighters with built-in cutters for $69 to $150, has seen a 35% increase in sales since November compared to the same period a year ago, said Keith Park, the company’s president.
“People are spending more carefully, but cigars and accessories are a more affordable extravagance,” he said.
Cigars are fashionable, but the popularity may have peaked and sales declines are likely, industry analysts cautioned.
Conversely, the strong demand for skin-care products will continue because baby boomers in their 50s are more concerned about their health and appearance, analysts said.
Estee Lauder is pursuing holiday business by offering $40 skin-care gift sets for $25.
“Women and men are looking for products for lines, wrinkles and firmness,” said company spokeswoman Cheryl Crispen. “More consumers need these products, but price--the savings value--is a major sales factor.”
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What’s Hot
Value-oriented shoppers are showing a preference for practical gifts this holiday season. Products in the following merchandise categories are strong sellers:
* Home furnishings
* Video games
* Jewelry
* Cellular phones
* Multi-function watches
* Sweaters
* Skin-care product gift sets
* Trench coats
* Cigar accessories
* Household appliances
Sources: Various shopping malls, retail chains and retail trade groups.
