Retailers everywhere are expecting lousy holiday sales. But one group is bracing for an especially harsh season — small, independent businesses that don't have the cash cushions or price-slashing abilities of the major chain stores.
Many small companies already are struggling this year due to sharp drops in consumer spending, the credit crunch and a weak national economy. Grim holiday sales could be enough to force many that rely heavily on the holiday season to shut their doors permanently.
"There are some independent retailers that will do fine, but the bulk of them will see a very, very difficult year," said Craig Johnson, president of Customer Growth Partners LLC, a New Canaan, Conn., consulting firm. "They really have to be creative in finding ways to get people to shop at their stores."
The dire forecast comes two days before Christmas amid separate projections by the International Council of Shopping Centers that November and December sales will dip at least 1 percent this year compared with 2007.
Luxury sales, meanwhile, fell 34.5 percent in the first week of December from the same period a year ago, according to SpendingPulse, a data service provided by MasterCard Advisors, and were down 23 percent in the five weeks ending Dec. 6.
Most independent retailers don't have the margins to compete on price. So, many are scrambling to find a competitive model this year — offering exclusive gift items, giving more personalized service or hosting events and fundraisers to lure in foot traffic.
Others are seeking customers in new markets or dabbling in direct sales to groups.
For example, men's apparel store Man of Fashion at Hickory Hollow Mall has visited more than 20 church congregations in the past three months, said assistant store manager Marques Santiago, adding that it has helped win new business. But sales are still flat to slightly down compared with a year ago.
The store also is giving a 10 to 20 percent discount to customers who bring in toys that go to charity, Santiago said. The drive has brought in new customers, who promise to shop at Man of Fashion again.
"We're doing as best as we can," Santiago said.
Stores ramp up serviceStephen Hoch, a retail expert at the University of Pennsylvania's Wharton School in Philadelphia, said small retailers need to be innovative about their marketing and use a personalized approach to compete against the big retailers that are "drowning them out" with advertising right now.
"They really have to go back to that mailing list of prior customers and make a direct appeal and send a compelling offer, such as a private sale or special event," he said. "The local guys need to be local, need to be relevant, need to be personal and play to their strengths."
Fine women's boutique Coco on Harding Pike in Nashville said it has tried to provide more customer service this year. Business is down about 10 percent compared with last year, though, said the store's buyer, Donna Duensing.
"We just try to be there for our customers," she said. "We're very customer-oriented."
Holiday sales are downHoch said small retailers shouldn't be afraid to haggle on price with prospective customers who are particularly price-sensitive.
Nino's, a men's apparel store at RiverGate Mall in Goodlettsville, offers discounted clothing packages at its stores in a bid to entice consumers to buy. For example, customers can buy a shirt, suit, tie and shoes starting at $119 — roughly a 50 percent discount, said owner Willie Anki.
Still, sales have dropped about 40 percent, compared with a year ago, Anki said. Customers that used to spend $200 to $300 on gifts at his store last year are now spending $10 to $20 on cheaper T-shirts and belts.
"It's not going that well," Anki said. "We have a recession. People don't have (any) money."
Other small retailers are trying to hold on through the holidays by finding new channels of potential business.
"It's very concerning that the market is so soft in what is usually our most profitable time of the year," said Vicki Updike, vice president of marketing and merchandising at Miles Kimball Co. of Oshkosh, Wis., which produces retail catalogs under several brands. Sales are down about 10 percent this holiday season.
So, in October, the 400-employee company began sending out 50,000 catalogs to residents of Canada through a company called Canada Post, which helps retailers handle the logistics of shipping products into the country.
So far, the results have been "encouraging," Updike said, with revenue per order from Canada about double that of U.S. orders. The company plans to continue expanding into Canada and hopes it will help boost sales in the months ahead.
"I think we're in survival mode right now," she said.
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