Home retailers’ holiday wish: Boosting sales

updated 3:19 p.m. ET Dec. 3, 2007

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 Alice Yoder, of Charlotte, Home Depot circular in hand, as she scanned the holiday section for a pre-lit 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 in a last-minute rush of customers 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 Home Depot. "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."

Retailers generally expect this holiday season to be a nail-biter, with most expecting only small gains in sales volumes compared with last year. It's even worse for the home retailers — consumers nationwide are forecast to spend only around $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 — offering both new and unique merchandise, plus running special online promotions, along with the traditional in store trim-a-tree wares.

Chuck Burton / AP Customers look at holiday merchandise at a Home Depot store in Charlotte, N.C. Consumers nationwide are forecast to spend only around $94 on home and holiday furnishings this season, down from last year's $115, according to Deloitte's annual holiday survey.

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 Inc., a new 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 The Container Store and Design Within Reach, with direct mail and e-mail offers for affordable small items and unique larger ones.

At Home Depot's Web site, customers can watch comedian and actor Steve Harvey talk about ways to prepare their home for the holidays, from floor installation to holiday 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 votives," said Katie Varrassi, of Charlotte, 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 holiday season, many retailers are just trying to get consumers "into their stores, Web sites, as quickly as they can before shoppers become even more timid about shopping," said WSL Strategic Retail's Liebmann.

Home retailers could use a strong holiday season. Both Home Depot and Lowe's Cos. both reduced their profit outlooks as they reported declines in third-quarter profits. In mid-November, Williams-Sonoma Inc., which operates Williams-Sonoma brand stores and Pottery Barn, reduced its fourth-quarter earnings 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 percent 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, Tex.-based The Bombay Co. Inc., which filed for bankruptcy in September, is going out of business in the U.S.

While the season might be a tight one for giving home decor, the National Retail Federation said 22 percent of adults ages 18 and older hope 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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