Retailers eye holidays tentatively
By Anne D'Innocenzio
Associated Press
NEW YORK — It's the height of the holiday ordering season, and Saks Fifth Avenue buyers Chuck Anderson and Lauren Forst are spending their days zipping in and out of trendy fashion manufacturers' showrooms along Seventh Avenue. They're examining must-have looks and writing up orders.
But an uncertain retail climate is slapping restraints on these buyers of contemporary sportswear.
"I'm still experimental, but I'm just more cautious," said Anderson, while fingering $200 jeans studded with safety pins at ABS Allen Schwartz. "In the end, it is all about profits."
To that end, he said he is sticking to proven brands like ABS and pulling business away from marginal suppliers.
Plenty of other merchandise buyers — both brick-and-mortar and online — are taking even more drastic measures in response to a consumer spending slowdown that shows no signs of improvement.
Fear of being stuck with too much inventory has them postponing much of their ordering by as much as six weeks. They're also slashing their budgets and sticking to lower-priced goods. They recall their big mistake of stocking up for holiday 2000, which turned out to be the worst season since at least five years.
As Arnold Aronson, managing director of retail strategies at Kurt Salmon Associates, puts it: "The byword is `Be conservative'."
Many retail executives have already placed their big orders for what is expected to be this year's big holiday winners.
In the video game world, Toys R Us and others are betting on three new hardware games — Nintendo's Gameboy Advance, launched earlier this month, and the Nintendo GameCube and Microsoft's Xbox, both due out in November.
In apparel, merchants are placing generous orders for slinky jersey knit dresses, sweaters with fur trims and jeans with tiger print washes.
In fashion, "buyers are cherry-picking items very carefully," said David Wolfe, creative director of The Doneger Group, a buying office whose clients include major department store and specialty stores.
Retailers worry that growing layoffs and high energy prices will slow consumer spending even further. Store executives are pinning much of their hope on the tax cuts and rebates signed into law this month by President Bush.
"If consumers put everything into savings, then they will come back to buy for Christmas," reasoned Michael P. Niemira, vice president of Bank of Tokyo-Mitsubishi Ltd. "If they spend it all, that might be the worse situation" because they might not have the money for a holiday shopping spree.
So far, retailers' spring and summer sales have been lackluster. Fall sales are a better predictor of the holiday season, but many executives are not optimistic.
"Currently, we don't see real signs of significant improvement," said Jan Drummond, a spokeswoman at Sears, Roebuck & Co. "We are anticipating a difficult second half and managing the business accordingly."
Online retailers are also reducing risks. With 35 million households shopping online, instead of the 41 million expected, Forrester Research now forecasts $65 billion in online sales this year, instead of $73 billion.
Ashford.com, the online accessories site, is paring down the brands it carries from 85 to 50, chief executive David Gow said. It will also significantly reduce the number of holiday styles from 30,000 to 20,000.
"It's safer to bet on consistent best-selling items than lesser-known brands," he said, adding that the company would also increase its stock of lower-priced items.
Kmart Corp.'s newly restructured Bluelight.com is also getting leaner. The online site is cutting back on poor-performing categories, such as apparel and automotive accessories, and beefing up its big-name brands.
Starting in October, Bluelight.com will aim to reduce its inventory risk by having many of its suppliers ship certain products directly to the consumer, said spokesman David Karraker.
Given retailers' wariness and procrastination, many manufacturers are left in limbo.
Marc Rosenberg, senior vice president of marketing for Hasbro's Tiger Electronics division, said, "Buyers are being more conservative until everyone sees what will rise to the top."
The company is pinning its hopes on I-Cybe, a fully motorized dog; Battlebots, robots based on characters of a real-life action drama on Comedy Central; and Shelby, an interactive clam.
"Toy-buying is usually wrapped up by May," he said. "Retailers are still looking to see what the big hits will be."
