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Home for holidays is retailers' theme

Stores stock more decor items to attract worried consumers, who are staying closer to the hearth this season.

December 08, 2007|From the Associated Press

CHARLOTTE, N.C. — Amid the paint, power tools and 99-piece wrench and ratchet sets, the aisles at Home Depot are filled this holiday season with wrapping paper, snow villages and artificial Christmas trees.

"I was a little surprised when I walked in," said Charlotte resident Alice Yoder as she scanned the holiday section for a Christmas wreath advertised for $59.99. "I knew Home Depot had a huge selection of lights and trees, but the Santas and other home decor, that I didn't expect."

The nation's beleaguered home retailers -- stung by declining consumer confidence, slumping home sales, tighter credit standards and rising fuel prices -- are fighting hard to attract Yoder and others to help make up for what's been a tough year.

"Customers still want to feel good about their homes," said Craig Menear, executive vice president of merchandising for Atlanta-based Home Depot Inc. "We took a bigger swing in holiday items this year, because we know that when times are more difficult, consumers want to take care of their homes."

Consumers nationwide are forecast to spend on average about $94 on home and holiday furnishings this season, down from last year's $115, according to Deloitte's annual holiday survey.

"With the rise of gas and home heating prices and the mortgage rate concerns, shoppers anticipate cutting back on many categories, including home," said Wendy Liebmann, president of marketing consulting firm WSL Strategic Retail. "It's a season of mind-set over matter, as shoppers feel very unsettled about what the year-end will look like for them financially and emotionally."

To compensate, home retailers -- including Macy's Inc., Crate & Barrel, Home Depot and others -- are offering new and unique merchandise and running online promotions along with the traditional in-store trim-a-tree wares.

At Pottery Barn, stores are offering holiday decorating classes and special shopping hours, and customers who attend receive a complimentary Pottery Barn design book. At Macy's, a product launch from Martha Stewart is designed to drive traffic to home departments that didn't exist last holiday season.

Other home retailers started the holiday push early, including Container Store Inc. and San Francisco-based Design Within Reach Inc., with direct mail and e-mail offers for affordable small items and unique larger ones.

At Home Depot's website, customers can watch comedian and actor Steve Harvey talk about ways to prepare a home for the holidays, including floor installation and festive decor. The store's offering is backed with a full marketing campaign, complete with print and electronic media, online and direct-mail advertising.

"I went in there for these and clear garbage bags and left with ribbon" and some votive candles, Katie Varrassi of Charlotte said as she loaded two rosemary bushes from Home Depot into the back of her sport utility vehicle. "I left with more than I came for. They were definitely impulse purchases."

This season, many retailers are just trying to get people "into their stores, websites, as quickly as they can before shoppers become even more timid about shopping," Liebmann of WSL said.

Home retailers could use a strong holiday season. Home Depot and Lowe's Cos. reduced their profit outlooks as they reported declines in third-quarter earnings. In mid-November, Williams-Sonoma Inc. of San Francisco, which operates Williams-Sonoma brand stores and Pottery Barn, reduced its fourth-quarter profit projections, citing weak sales in areas of the country that have been hit hardest by the housing slump.

Consumer spending on furniture and bedding is expected to grow by only 1.5% this year -- making 2007 the industry's worst since 2001. The latest Commerce Department figures show furniture sales continuing to slow, posting their third consecutive month of declines in October.

After three years of growing losses and declining sales, Fort Worth-based Bombay Co., which filed for bankruptcy protection in September, is going out of business in the U.S.

Although the season might be a tight one for giving home decor, the National Retail Federation said 22% of adults ages 18 and older were hoping to receive home decor or home-related furnishings under the tree this year.

"We know that people come into our stores and they are definitely looking for gifts," Crate & Barrel spokeswoman Bette Kahn said.

"Now they are looking to make their guests comfortable, whether that's a purchase for their own home or someone else's home."

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