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Holiday retail sales could be a mixed bag

Christmas spending is expected to rise about 1% over last year, but Halloween spending could fall more than 15% on average, industry surveys show.

September 29, 2009|Andrea Chang

It's no miracle on 34th Street, but shoppers this Christmas are expected to spend with a little more cheer compared with last year's dismal holiday season.

Halloween sales, however, are expected to be scarier, with the average consumer projected to spend 15.4% less on the holiday compared with 2008 -- even though Oct. 31 falls on a Saturday this year.

The findings, released in separate reports this week by the International Council of Shopping Centers and the National Retail Federation, show continued weakness in the battered retail industry, which for months has suffered as frugal shoppers have avoided malls, slashed spending and hunted for discounts.

That led to the worst holiday season in four decades in 2008, despite some of the most aggressive markdowns ever seen on merchandise including electronics, apparel and luxury goods.

With consumers feeling slightly more optimistic lately, sales during the November-December period are expected to increase 1% at major U.S. chain stores open at least a year, the shopping center council said Monday.

That's much better than the 5.8% decline for the same period last year, but chief economist Michael Niemira warned that retailers were still hurting.

"One percent is not strong," Niemira said. "It's just considerably stronger than we've been seeing."

To prepare for the holiday season, retailers are lowering inventory levels and trimming holiday hiring budgets.

Forty percent of retailers said they were planning to hire 5% to 25% fewer workers during the Christmas season compared with last year, and 48% said they would hire the same number of workers, according to a survey released last week by consulting firm Hay Group.

That's bad news for those looking for jobs, especially because 62% of retailers said they had received more seasonal applications this year than in 2008.

Value will be the buzzword this year as shoppers spend on gifts for family and friends, industry experts say, and retailers are expected to again offer good deals throughout the season.

Discount giant Wal-Mart Stores Inc. is working on bringing "terrific values" into its stores for the holidays, said Laura Phillips, vice president of toys for the company's U.S. division.

"Clearly in these tough economic times, acceptable price points really help our customers," Phillips said.

"We're feeling optimistic about the programs we've put together."

But merchants could struggle with Halloween sales, according to a survey released today by the National Retail Federation, which showed that spending is expected to be down and fewer people plan to celebrate the holiday this year.

Consumers are expected to spend an average of $56.31 on Halloween, a 15.4% decline from $66.54 in 2008.

Of the nearly one-third of respondents who said the economy would affect their Halloween plans, 88% said they would spend less overall, 46.5% said they would buy less candy, 16.8% said they would make their own costumes instead of buying new ones, and 5.3% said they wouldn't hand out candy.

The findings contrast sharply with the retail group's 2008 survey, which found that more consumers were planning to participate in Halloween festivities as an inexpensive way to have fun during the recession.

"The economy has caught up to Halloween this year," said Tracy Mullin, president of the retail trade group.

"Since retailers know that Americans will be looking to celebrate on a budget, there's no doubt we will see creative costume and decorating ideas in every price point imaginable."

The Halloween survey polled 8,526 consumers from Sept. 1 through Sept. 9.

The survey also found that consumers plan to spend an average of $20.75 on costumes, $17.99 on candy, $14.54 on decorations and $3.02 on greeting cards.

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andrea.chang@latimes.com

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