November 24, 2010 / 7:06 PM / 7 years ago

Stores hone strategies for holiday shoppers

CHICAGO (Reuters) - Reuters is taking a close look at a handful of retailers through the holiday shopping season, starting with a snapshot of their strategies and then monitoring how the strategies change during the season.

The companies Reuters chose include Sears Holdings Corp, which has struggled to attract sales while still maintaining profits; J.C. Penney, whose sales are improving but still lag rivals, and two that have been outperforming competitors, Target and Aeropostale Inc.

We will also focus on two of the key holiday categories, toys and electronics, through Best Buy Co Inc and Toys R Us.

Below, company executives discuss their strategies for capturing a greater share of holiday sales, which are forecast to rise 2.3 percent, according to the National Retail Federation.


Aeropostale has counted on flexibility to adjust prices to attract shoppers but is also looking to be more efficient this holiday season with a new “door to floor” delivery strategy. Arriving merchandise will be put immediately onto the selling floor instead of in the back of stores to save time.

“We’re focused on merchandise flow,” Scott Miller, director of stores, said on a recent visit to a new store in downtown San Francisco. “We move a lot of units.”

The company, where rotating promotions are built into the business model, is more focused this year on wovens after offering too few last year, so patterned sweaters and hoodies dot the stores.

Those tops are the focus of gifts, while more shoppers buy jeans, skirts and cargo pants after the holidays using their gift cards, executives said.

To drive traffic into stores, Aeropostale is also offering more “Get it Till it’s Gone” promotions.


The department store chain has reported higher same-store sales for three straight quarters, but some of that has come at the expense of profit-sapping discounts. Penney is under pressure after investor William Ackman took a 16.5 percent stake last month.

The company wants to be ready for any kind of customer, those looking for bargains and those ready to splurge, said Liz Sweney, co-chief merchant of J.C. Penney Co Inc.

“We do think that this year the customers have adjusted to the environment. Even though they remain cautious, we also think that they’re looking for aspirational and exciting and meaningful gifts,” Sweney said.

Penney is trying to win market share from rivals Macy’s and Kohls Corp by lining up more exclusive merchandise and improve its fashion credentials.

For the holidays, Penney will open 200 temporary Sephora cosmetics stores, bringing the brand into about 40 percent of its stores.

It is also offering free shipping to and returns from physical stores for online orders for the first time.

Penney has grappled with finding the right inventory levels. Chief Executive Myron Ullman said this month the company wants to avoid a repeat of 2009, when it lost out on sales because some items were understocked over the holidays.

For example, it ran out of green St. John’s Bay women’s pea coats featured last year in its Black Friday circular. This year, Penney ordered three times as many coats in that color.

“This year, we feel very good about our inventory ownership on all those key gift items going into Black Friday,” Sweney said. “We’re in much better shape than we were a year ago.”


Discounter Target has benefited from consumers looking for apparel and home furnishings and trading up from Wal-Mart Stores Inc but still expects heavy discounting to be a key to the holiday season.

”I would expect to see some deeper discounts out there“ compared with last year,” said Troy Risch, executive vice president of stores.

Risch hopes he holds an ace in the hole with the company’s recently launched plan to give immediate 5 percent discounts on purchases made with Target credit cards.

“Our price-match policy is in place and then you have the 5 percent off,” Risch said. The company sees that as one factor that will help boost same-store sales by 2 percent to 4 percent in the fourth quarter.

Another is the roll-out of more fresh-foods to stores, which it says brings customers to Target more frequently.

During its current four-day sale, which began on Sunday, a lot of the offerings were in grocery, Risch said, including in cheese and meats for entertaining.


Sears saw sales at its namesake stores plunge in the latest quarter and is extending layaway plans to help customers who are carefully managing budgets.

The retailer, which also owns the Kmart discount chain, is giving its customers up to 12 weeks to pay for layaway purchases this year versus eight weeks previously.

“Customers are telling us they needed more time to pay off layaway purchases, especially when they are coming to Sears and getting more high-ticket items,” said Tom Aiello, divisional vice president of media relations

Sears is also opening its namesake department stores for the first time ever on Thanksgiving Day and is installing toy shops within many stores.


Toys R Us is bullish on demand for its busiest season.

“This will be our biggest Christmas ever,” CEO Jerry Storch told Reuters.

Toys R Us has opened 600 U.S. Toys R Us Express pop-up, or temporary, stores, more than six times what it opened in 2009. It already runs 587 full-size namesake stores. It has also opened 10 FAO Schwarz pop-up stores.

The retailer is offering more exclusive items this year to steer bargain-hungry shoppers away from Wal-Mart, Inc and Target.

“Competitors can’t cut prices on items they don’t have,” Storch said at a holiday preview event at the company’s flagship store in New York.

The company is also staffing in line with its bullish expectations, planning to hire about 45,000 seasonal workers, 10,000 more than in the past three years.


Best Buy is also forecasting better holidays this year versus 2009, said Shari Ballard, executive vice president.

The electronics retailer started promotions earlier than usual this year, hired more phone agents and increased their level of training to cater better to customer queries on gadgets.

“We started earlier. We used online more distinctly than we did in the past ... We have been on television about 10 days earlier this year than last year to make sure that we are getting the message out,” Ballard said.

It is spending more on promotions this year versus 2009 and is also offering free shipping.

Reporting by Brad Dorfman in Chicago, Alexandria Sage in San Francisco, and Dhanya Skariachan and Phil Wahba in New York; Editing by Steve Orlofsky

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