Don’t try to tell retailers that it’s too early for holiday shopping. Demand is already high for some toys.
Toys R Us has stopped accepting reservations for the Tabeo tablet and Wii U game console because of high demand this past month. The retailer offers a hot-toy holiday reservations list, which allows consumers to reserve popular items for purchase later in the season.
Wal-Mart told investors this past week that the company has already lined up $400 million in early holiday layaway sales in its program that launched a month earlier than it did in 2011. That $400 million is more than half the amount that shoppers put in layaway at Walmart stores during all of last year’s holiday season. Top items so far this year include 50-inch televisions, Apple’s iPad tablet computer and trampolines.
But there are still a lot of questions about this holiday shopping season, which is the most important time of the year for most retailers.
September’s national unemployment rate drop to 7.8 percent — the first time it has dipped below 8 percent in three years — hints at the reason for the early uptick in holiday layaway and could spell good news for retailers. But lackluster economic growth — as well as the looming fiscal cliff with tax increases and deep spending cuts that could take effect early next year if Congress doesn’t reaches a budget deal — is also weighing heavily on consumers, analysts say.
Still, the National Retail Federation is expecting a 4.1 percent increase in holiday sales this year, its most optimistic forecast since the recession. That is below the 5.6 percent increase in actual sales in the 2011 holiday season.
“Overall, we would view this forecast as good news considering the variables and uncertainty that still exists in our economy and the things that are on consumers’ minds,” Matthew Shay, the president of the NRF, said.
Retailers’ seasonal hiring looks to be on par with, if not slightly larger, than that of last year. Wal-Mart said it will hire about 50,000 holiday workers this year, up slightly from the previous year. Kohl’s said it is boosting its holiday workforce by 10 percent
to about 52,700 employees. And Macy’s is inching up its holiday hiring by 2.5 percent to about 80,000 seasonal workers. In total, the NRF said it expects retailers to hire 585,000 to 625,000 seasonal employees this year, compared to 607,500 in 2011.
One sign that consumers are still feeling a lot of economic pressures is the big response to holiday layaway programs already this year. After a strong showing to layaway programs last year, a number of retailers have dropped or lowered their upfront fees and rolled out the programs earlier.
In September, Toys R Us announced it was dropping its $5 service fee on layaway orders placed through Oct. 31. Like Wal-Mart, it also started its holiday layaway program about a month earlier than last year.
“To date, the number of layaway orders initiated in our stores has increased significantly over last year, a testament to how the free layaway offer is resonating with consumers,” Katie Reczek, a Toys R Us spokeswoman, said.
As for inventory levels, Shay said retailers seem to be taking a mixed approach. About a quarter to a third of stores have indicated that they are boosting inventory, while the same amount say they are lowering inventory, he said.
“That wide range reflects there is still uncertainty in the economy. People are hedging their bets.”
It’s been another roller-coaster year for retailers, he said. The year started with strong sales, which tapered in the spring. Summer sales were strong, but they have slowed again, too.
Jack Kleinhenz, the NRF’s chief economist, said the economy remains a source of anxiety, “snd I don’t expect that anxiety to dissipate (soon).”
At the same time, he said, consumers are in some ways in a stronger position than they were this past year with slightly more income, more savings and higher home values on average.
“That certainly influences people’s willingness to spend, because they feel a little bit perhaps richer,” he said of the influence of home values.
James Russo, Nielsen’s vice president of global consumer insights, said his firm has seen this year the highest level of consumer confidence heading into the holiday season that it has seen in the past four years.
“They have a cautiously optimistic approach for the holidays,” he said. “So there is some reason for hope.”