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 What is a good deal? Where? When?
Analysts study the biggest U.S. retailers and take hard looks at
what goes on inside their stores each holiday season by making
visits and poring over balance sheets.
Charlie O'Shea, a vice president at Moody's Investors Service,
follows Wal-Mart Stores Inc, Target Corp, Kohls Corp, Toys R Us Inc
and Best Buy Co Inc - some of the biggest forces during the holiday
shopping season.
Reuters asked O'Shea to share some insights on what to expect this
year.
Q: Is there any shopping trend for 2015 that looks different
from prior years?
A: The holiday shopping season started far earlier this year
due to the early Star Wars toy launch ("Star Wars: The Force
Awakens" opens Dec. 18), which we believe pulled some sales forward.
Also, some of the specialty retailers are pulling back on
Thanksgiving Weekend store hours, which makes sense as our view is,
this is more of a destination-type phenomenon for category killers
like Toys R Us, discounters like Walmart, Target, and department
stores like Macy's and Kohl's. No one stands in line to browse.
Q: You've been visiting retailers throughout Thanksgiving
weekend for a decade. What do you look for?
A: What people buy. It's always TVs and consumer electronics.
I'm looking to see lines by comparison (to prior years). Then I'm
looking in the shopping carts when I'm in the stores. Did they buy a
DVD player? Did they buy a theater system? Did they also buy an HDMI
cable or surge protector? Those are high margin items. If people
come out with a device and a shopping bag, the shopping bag is where
the money is.
Q: What specific stores or chains appear to be taking more
aggressive pricing or discounting strategies this year?
A: Walmart will set the tone for pricing and promotion this
holiday, with Amazon a close second. The challenge for the
competition is how low to go, and how early.
Q: Is there any significance to what a store puts in end-cap
displays at the ends of shopping aisles?
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A: End-cap displays typically sell the highest margin,
attachment-type products - batteries, for example - to take
advantage of impulse tendencies.
Q: Are there any products shaping up to be must-haves this
year?
A: Electronics will continue to be the hottest category. 4k
TV prices have come down. My guess is they'll be heavily promoted.
They're hard to ship because they're so thin. On the toy side, Star
Wars merchandise will be a key driver. My sense is that after the
movie opens, you could see some further promotions.
Q: When does it make more sense for consumers to go to
brick-and-mortar stores for holiday gifts rather than shop online?
A: Given that 93 percent of sales are done in a
brick-and-mortar location, clearly there is a lot of shopping done
via physical stores.
For high-end products, consumers are more apt to want to see it and
touch it, and likely take it with them to ensure they have it.
As we have seen the last few holidays, shipping guarantees can be
hollow, with some merchandise not received on time. Theft is an
issue as well. We also believe consumers are concerned about theft
and may be hesitant to have a box left on their porch or driveway
for fear it may be stolen.
(Editing by Beth Pinsker and Richard Chang)
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