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Sacramento, national retail sales expected to strengthen this holiday, economists say

Rebecca Farinha, 3, sits with her father, Mike, and brother, Jonathan, as they are photographed with Santa Claus at the Galleria on Monday.
Rebecca Farinha, 3, sits with her father, Mike, and brother, Jonathan, as they are photographed with Santa Claus at the Galleria on Monday. jvillegas@sacbee.com

An improving economy, a boost in hiring and lower gas prices could combine to produce a blockbuster holiday for retailers, economists say.

Jeff Michael of the University of the Pacific said he expects 2014 to be the strongest holiday season since the recession officially ended in 2009.

“People will open their wallets a little wider this year,” Michael said. “I’m not anticipating it to go crazy, but the general economic forecast is getting better.”

Gasoline prices below $3 a gallon are also making consumers feel better off, he said. “It’s the most visible price that we see.”

The National Retail Federation predicts that November and December retail sales will rise 4.1 percent over last year. The average person is expected to spend $804.42 this holiday, up from $767.27 in 2013.

Sacramento-area malls and retailers are jostling to cash in on the new-found confidence. Both Arden Fair in Sacramento and the Westfield Galleria at Roseville will open at 6 p.m. on Thanksgiving, in line with the ongoing industry trend of starting Black Friday sales ever earlier.

For Arden Fair, 6 p.m. on Thanksgiving marks the earliest it has opened for Black Friday, according to senior marketing manager Jamie McDaniels. In 2012, the center opened at midnight. Last year, the shopping spree started at 8 p.m.

McDaniels said 6,000 people rushed in at 8 p.m. last year. A total of 18,000 shoppers came through for Thanksgiving, with 70,000 more on Black Friday. She said strong foot traffic drove sales, noting that the conversion rate – the number of walk-in customers who make a purchase – increased over the past year.

“It’s going to be interesting this year to see how it plays out,” McDaniels said. “We’re not sure if we’re going to get the same rush.”

Retailers are focusing on capturing the first dollars spent and reeling in the die-hard shoppers who will line up hours or even days in advance for so-called “door buster” deals. Any stores not open on Thanksgiving Day may miss out, economists say.

“Your competitors are doing it, so you have to open early, as well,” said Sung Won Sohn, an economist at California State University, Channel Islands. “The holiday shopping season is becoming longer and longer.”

Mercedes Ben, manager of the Wilsons Leather store at the Galleria, said she will move up her Thanksgiving dinner to 3 p.m. so she can work later that evening.

“I’m cooking the day before,” she said. “All I have to do is throw my turkey in the oven first thing in the morning.”

While some labor unions and retail employees object that stores are encroaching on the holiday, Ben said her employees are excited to work that night, in part, so they can get a head start on their own Christmas shopping.

Sohn, who is also vice chairman at the Forever 21 apparel chain, said such early store openings don’t increase the overall amount of money spent during the holidays. They merely affect when the money changes hands.

“It’s not going to increase your overall sales,” Sohn said. “It simply spreads out.”

Retailers clearly fear missing out if they don’t get into the chase early, however. Macy’s, Kohl’s, Sears and Target will swing their doors open at 6 p.m. Thanksgiving night. J.C. Penney, which has struggled with sales in recent years, will beat them by a full hour.

Notable exceptions include Costco and Nordstrom, which will stay closed during Thanksgiving.

Many of Wal-Mart’s superstores already stay open 24 hours. But the much-anticipated door buster deals begin at 6 p.m. Thursday, with customers able to line up around the items prior.

The nation’s largest retail chain is planning an aggressive blitz to ring up the most sales. With its trademark one-hour guarantee, customers in line during certain times will be guaranteed door buster items like a 50-inch LED TV for $218 or a 32-inch version for $98.

“No longer do customers need to stand in line and just hope they’re going to get the limited items,” said Delia Garcia, a Wal-Mart spokeswoman, suggesting that the policy adds to the bottom line.

The retail behemoth tried to get ahead of the season this year, launching waves of sales starting around Halloween. In addition, its brick-and-mortar stores will also be price-matching online competitors for the first time, namely Amazon.com.

Despite the early sales barrage, about 65 percent of consumers haven’t started shopping yet, according to the National Retail Federation. Its data suggest the spending doesn’t start in earnest until after the turkey has been eaten.

Ellie Solorio, 32, was at Arden Fair last week, not to check out the deals but to grab a quick bite. The Woodland office administrator said she would wait until Black Friday to consider shopping.

“While it’s tempting to get ahead and start buying, Black Friday just has more sales,” said Solorio, adding that the improving economy has given her more money to spend on gifts for family.

Last Christmas, Solorio was unemployed and spent less than $200 in presents. This year she is budgeting $600.

Locally, seasonal hiring has started strong. United Parcel Service is currently seeking 100 workers to help deliver and sort packages. Macy’s and Target have 71 and 89 openings, respectively, according to online job board CareerBuilder.

Sally Hamilton, a business professor at Drexel University’s Sacramento campus, said the region’s relatively strong economy stands out in the Central Valley.

“Sacramento as a whole is way ahead of Fresno, Stockton or Modesto,” she said.

One thing retailers lack this year, though, is a hit product to drive sales, Sohn said. High-definition televisions for years have been sold as door busters, but the U.S. market is saturated. Experts say sales this year will ultimately center on general merchandise, including apparel, which in the past had languished while shoppers snapped up iPhones and gaming consoles.

“Had the iPhone 6 come out in the middle of December, that would have hurt the other sectors,” Sohn said.

In a consumer survey, the retail federation found nearly 61 percent of Americans plan to buy clothing and accessories; 46 percent books, CDs, DVDs and video games; while 42 percent will buy toys. By comparison, 30.7 percent are seeking electronics.

It remains to be seen whether retailers this year can overcome their dependence on deep sales, which have become so entrenched in recent years that consumers expect them.

Angela Basquez, 38, an environmental scientist with the state, was shopping during lunch at Arden Fair last week. “If the discount isn’t over 50 percent,” she said, “it’s not worth my time and money.”

Call The Bee’s Richard Chang, (916) 321-1018. Follow him on Twitter @RichardYChang.

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