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Recession-stung stores plan old-fashioned holidays

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ANNE D'INNOCENZIO
October 4, 2009
— Stores are turning back the clock, conjuring images of hearth and home as they stock their holiday merchandise.

Retailers hope embracing holiday traditions from cozier times will tempt recession-weary consumers to open their wallets in a season expected to show flat sales at best.


That means shoppers will see more gingerbread houses and peppermint crunch cookies, and fewer exotic teas and flavored olive oils; classic ball ornaments instead of offbeat cowboys or cartoon-themed character figures; and an emphasis on simple festive wear like shimmery tops instead of elaborately beaded gowns.


Traditional Christmas colors — red, green and gold — are also back.


That's a big departure from recent years when stores pushed the whimsical and splashy, from the upside-down Christmas tree fad in 2007 to stockings adorned with mermaids and elephants. Stores, wary after the sudden, deep drop in spending late last year, seek to tap into an American psyche that wants comfort and affordability after so many shocks.


A lot is riding on the switch, because holiday sales account for up to 40 percent of annual sales for many merchants. For retailers already hobbled, it could be a do-or-die season.


Industry worries are high because shoppers, who were afraid to buy a year ago, are now grappling with rising job losses, reduced hours or unavailable credit. The unemployment rate is now 9.7 percent, up from around 7 percent last holiday season.


"When the world feels upside down, you don't want your tree to be," said Kit Yarrow, professor of consumer psychology at Golden Gate University in San Francisco. "Nostalgia is a way for people to feel safe."


Last fall's spending falloff came too late for the industry to overhaul its products in time for the holidays. Stores typically start planning for Christmas a year in advance. Starting in the depths of the meltdown, stores ditched their 2009 plans in favor of more comforting themes, which appear to be striking the right note for an economy that continues to lose jobs and that has only tentative patches of stabilization.


"The ability for consumers to buy is much worse than it was a year ago," said Mark Vitner, senior economist at Wells Fargo. "It's just not fashionable to spend a lot of money for Christmas, or for anything. It is fashionable to live within your means."


Home shopping network HSN was already starting to create an elaborate peacock-themed Christmas, when the financial meltdown spurred it to scrap the designs in favor of an old-fashioned approach: tartan plaid on everything from throws to ornaments, and stockings adorned with classic icons such as angels and Santas.


"The peacock had stood out like a trend, but it wouldn't have been the safe tradition," said Chris Nicola, HSN's vice president of merchandising, home design. "(This) is comfortable to look at. It's familiar."


Stores are still feeling the pain from last year's holiday season, which economists say was the weakest since at least 1967, when the Commerce Department started collecting retail sales data. And this year could even be worse.


Vitner forecasts total holiday sales could be down as much as 3.5 percent for November and December, on top of a 2.5 percent drop a year ago. The best-case scenario, Vitner believes, is for a 1 percent decline.


A 4 percent sales gain is considered healthy if inflation is low. The industry enjoyed gains of almost 8 percent in 2005 and 9 percent in 1999, when both the real estate and the stock market were booming, Vitner said.


The National Retail Federation trade group has not released its holiday forecast yet. According to its calculations, holiday 2008 sales fell 3.4 percent from the year before. Like Vitner's figures, NRF's numbers exclude restaurants, gasoline and autos, but the trade group also excludes online sales.


Home Depot, which had experimented in the past with of-the-moment hues of purple and brown for holiday decor, is going back to red, green and gold. The Christmas trees that hung upside-down? Gone entirely. And the regular trees are green, not red or gold.


Luxury retailer Saks Fifth Avenue is stocking up on gingerbread houses and ball ornaments; it's also opening a holiday men's shop filled with classic accessories like suspenders and cufflinks.


That fashion is coloring the holidays from cards to ornaments:


— Hallmark Cards Inc. is tapping into this nonmaterialistic mood by adding cards that focus on the importance of being together with family, rather than gift-giving.


—Online retailer 1-800 Flowers created a whole new division called 1-800 Baskets, selling gift baskets with simple edibles like roasted salted nuts and peppermint crunch cookies in baskets priced from $15 to $400. In past holiday seasons, the company had emphasized elaborate floral arrangements, exotic teas and wine sets that cost as much as $1,200.


"It's old-fashioned and traditional, and therefore much more in vogue," said Jim McCann, 1-800 Flowers president.


—Saks Fifth Avenue developed a store-brand line of traditional ornaments costing $8 to $32. That compares with the $50 average price for well-known designer brand and key Saks supplier Christopher Radko.


Ostentatious outdoor displays are also getting the boot.


HSN is moving away from holiday lawn decor to interior decorations, including adding nativity scenes. That means fewer of the big inflatable lawn decorations that have dominated suburban yards in recent years.


"People are spending more time inside. They are doing less of the showoff" on the lawn, Nicola said.



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