Reuters Insider - Webinar: Holiday cheer or fear?

Pacific Ventures

22/11/2013 14:41

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 Source:             Thomson Reuters                                   
                                                                       
 Description:        We take a look at the Reuters IPSOS poll for the  
                     2013 holiday season with our StarMine expert      
                     Jharonne Martis.                                  
 
 
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 Short Link:  http://reut.rs/HDsbzC  
 
 
 Transcript (May be auto-generated)                                    
                                                                       
 Thanksgiving is around the corner and that's officially the green light for holiday shopping. So Thomson Reuters along with Ipsos conducted a poll on holiday shopping trends covering everything from how much people are planning to spend to what they're spending their money on. Let's check out some of the results. Joining me now is Jharonne Martis, not only is she a fashionista obviously but she is Director of Consumer Research here at Thomson Reuters StarMine. Okay. So the poll covered about 800 adults and 
 teens, right? If you were to assign a tagline to this, the theme of this poll for the holiday season, what would you give it? Probably "The Congress That Might Have Stolen Christmas". Above 54% of the respondents said that they are going to be very cautious with their spending this holiday season because of the government shutdown and the uncertainty in the economy. And as a result, we're already seeing that retailers are becoming a little bit desperate because shoppers are not shopping. Retailers have 
 already had a very lackluster year. Back to school was less than stellar. So they're becoming a little bit desperate and they're talking about steep promotions everywhere going into the holiday season. So Congress a bit like the Grinch. "The Congress That Might Have Stolen Christmas". Alright, so at this point though, how many people have done their holiday shopping? Not even half. Wow. So a lot of the respondents have not completed their holiday shopping. One thing that happens every year is that we know 
 is that consumers like to procrastinate. But one thing that's going to bring the shoppers to the stores are the steep promotions. And this is where retailers have to be careful. Take Best Buy for example. They said yesterday we know it's very promotional out there and if our competitors are going to offer steep promotions so are we even if it hurts margins. And as a result the stock declined. So retailers have to be very careful in order to how much they're going to offer and in order not to hurt the 
 margins. Okay. We'll get into those discounts and promotions a little bit later on. But I want to ask you first, bricks and mortar versus online. How do you see the breakdown there? Well online is going to be very key this holiday season even for retailers that already missed earnings expectations like Abercrombie & Fitch today. They saw an increase in ecommerce online presence by 10%, Best Buy 15%, and even Target was able to save $14 million over the last six months by offering digital coupons. So they do 
 know that the consumer is going more online and they're moving with the times. So you have to have a really good websites, mobile social media presence going into this holiday season. Having said that, consumers still prefer the in-store shopping experience rather than shopping online. And in order to bring them into the stores, they're going to have to have the promotions. Now consumers may not be opening up their wallets but where they are spending is at the jewelry and home improvement and goods sector. 
 Interesting. Okay, something else that we'll do a deeper dive on a little bit later. But I want to jump back actually because we have a question from a viewer out there and the question is, what percentage of consumer spending will be influenced by the actions of the Fed? A significant amount. In fact what we're seeing already is that personal savings has been on the rise which is a very similar trend that we saw during this past recession, which shows that consumers are very concerned about their jobs and 
 they want to have money in the bank in case they do lose their jobs. So again it underlines the importance of how stingy and frugal consumers are going to be this holiday season. Interesting. Okay, getting back to you talking about online before. Amazon of course the elephant in the room, the big vehicle out there, platform out there. Any vulnerabilities? Yes actually. They've been growing for the most part. Revenue has been on the rise but where they've seen weakness is in the international exposure 
 because of the foreign exchange rates. So if this continues to be the case it could hurt their earnings but not as much because strength in the United States is still bigger than in the international space. Something that Amazon's going to be selling of course and is selling, tablets. Tablet wars really heating up. Where do you see things stand as we head into the holidays? Well Apple is still the preferred tablet. Most respondents gravitate towards the Apple followed by the Samsung Galaxy. And this is very 
 important for margins for them because when you look at the latest phone, that's the 5C and that's a lower margin product, whereas the Apple iPad produces bigger margins. Having said that, analysts are very optimistic because they believe that Apple will see a 6% jump in revenue this holiday season. And even impressive 10% jump in iPad sales. Right, okay. Somebody else who sells tablets, Best Buy. Best Buy along with JCP and you touched on Best Buy earlier, along with JCP two big turnaround stories this 
 year. What do they need to do? What else, you know, cheese it up for us some more because we want to know in addition to JCP to get things going how important is the quarter for them and how do they sustain any momentum going forward? Well, JCPenney is trying to regain back that core consumer that they've lost. And by doing so, they're really doing a push with their marketing and new products to communicate this to their core consumer and bring them back. And as a result, analysts are optimistic and the 
 retailers expect to post its first positive same store sale in this holiday season. So if they are able to really communicate with their core consumer and bring them back, that bodes well for them next year, for them. Now Best Buy on the other hand, they've been a victim of showrooming where consumers come in the store and they play with the item and then go online and buy it for cheaper. This year, they're trying to use that to their advantage. So they want you to come into the store, play with the item. 
 But this time, there's no reason for you not walk out with it because they've already trained their customer service to give you the best information on the product and they're offering price matching. So if you're in the store and you can tell them, hey it's cheaper somewhere else, they will match the price for you and ship it for free. So there's no truth to the rumor that they're actually just grabbing you by the collar and directing you to the checkout aisle? Indirectly, they are. Indirectly, they are - 
 very, very smart. Okay. Alright. So from your research, who's leading in terms of same store sales, do you think, projections going into the holiday season? Well, it's interesting because in terms of sectors we're looking at jewelry, home improvement, the discounters, in fact, the respondents of the survey indicated that they will shop at a mix of stores with the discounters taking the lead. And when we dig deeper into the discounters we find that the dollar stores are on top. The consumers know that they 
 can go there to buy the tape, the wrapping paper, and even snacks to entertain at home. And others, the respondents in the survey, also indicated that they want to save money on gas, so they want to shop nearby their house. And they can do so at the Wal-Marts, at the Sam's Clubs and Costco. They can fill up the gas while buying groceries for the holiday season. But you also mention