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Looking for a little cha-ching

Retailers are cautiously anticipating a holiday season that many economists and market research companies expect to be the industry's best in four years.

At TJMaxx, the checkout counter is flanked by tables stacked high with $10 bath oil sets and $20 cosmetic kits touted as "giftables."

At Saks Fifth Avenue, a new boutique caters to revived interest in fur stoles and wraps and fur trim for sweaters, coats or blazers.

At Burdines, festive new evergreen decorations laced with twinkle lights and shiny wrapping paper are strung from the ceiling.

And at Westfield Shopping Town Brandon, general manager Stephen Fluhr is dug in for the tough slog ahead. "I just took what's probably going to be my last day off for a long time," he said.

Retailers are ready for a holiday season that many economists and market research companies predict will be their industry's best in four years.

The National Retail Federation forecasts a 5.7 percent gain over last year, to $217.4-billion in sales of general merchandise, apparel and furnishings for November and December. A consensus of 44 securities analysts polled by the International Council of Shopping Centers sees a more modest 4.4 percent gain. Either result would be a vast improvement on last year's anemic 2.2 percent holiday gain, which was the industry's worst Christmas since the late 1970s.

Yet you wouldn't know it by talking to many retail executives. They are usually flush about their prospects this time of the year. But having been disappointed by past predictions that the economy was about to turn around, very few are doing cartwheels.

"We're optimistic, but we've been conservative in building up our inventory," said Vanessa Castagna, chairwoman of JCPenney stores, catalog and Internet.

"It's going to be decent, but no barn-burner," added Robin Sanderford, president and chief merchant for Dillard's southeast division.

"The potential is there for a decent holiday," said Bob Beall II, chairman of Beall's Inc., a Bradenton retailer that increased inventory about 8 percent at its 72 department stores. "But a lot of retailers aren't looking much beyond their current business. After all, there's been a lot of government pump-priming injected into improving this economy that consumers might have spent already."

Nonetheless, economists point to low interest rates, mortgage refinancings, tax cuts and a rising stock market. Market research suggests consumers are more willing to open their wallets this year.

"Americans appear ready to shop and ready to spend just in time for the biggest shopping season of the year," said Tracy Mullin, chief executive of the National Retail Federation, the industry's largest trade group.

The holidays can make or break a year for retailers. Many generate up to a third of their annual sales and half their annual profits in the last two months of the year. Stock prices of many big retailers already reflect expectations for a solid holiday performance. Many companies are trying to hold the line on profits by not overstocking the shelves. That way they won't have to slash prices as much to unload merchandise that doesn't sell at full price.

"Retailers are playing it conservatively this year because many of them plan with their eyes looking at a rear-view mirror, which this year gave them a pretty ugly view," said Carl Steidtmann, chief economist for Deloitte Research, who is forecasting a 6.5 percent to 7 percent sales gain.

"As a result, inventories this holiday season have been kept relatively low for this time of year," Steidtmann said. "It won't be a very promotional holiday in terms of pricing. Shoppers will wait for sales, as usual. That suggests a late holiday rush, with a lot of the sales coming after Dec. 25 when people cash in all those gift cards and shoppers finally see some true clearance prices."

Of course, the economic recovery and improved consumer confidence remain fragile enough that the optimistic forecast could easily come unraveled. It wouldn't take a national calamity. Once a few major retailers decide to start discounting early, prices would cascade as fear spread to rivals worried about being stuck with unsold inventory.

In fact, projections of a healthy sales increase lost some of their oomph when Wal-Mart Stores Inc. last week shaved a penny or two from its 65 cents a share forecast for fourth quarter earnings. Wal-Mart, which sells five times as much merchandise as its closest rival, is expecting a modest 3 to 5 percent sales gain.

"I believe the holiday season will be better than last year, but a lot of the improvement will be due to easier comparisons with last year," said Lee Scott, Wal-Mart chief executive. "We are still seeing very cautious consumers who are timing their spending around receipt of their paychecks."

Retailers enjoyed a healthy back-to-school season this summer, but such sales trends are not always a good barometer for the holidays. Many retailers reined in their inventory buildup for the holidays when sales stalled during October, largely because unseasonably warm weather in many regions hampered sales of winter clothes.

"Despite the pause in October, you can see the momentum gaining in the sales numbers since July," said Michael Niemira, an economist who tracks sales of 72 chain stores for Bank of Tokyo Mitsubishi in New York. He forecasts a 5.5 percent or better sales gain for the holidays. "The luxury market has been revived by the stock market. The middle-class market is beginning to come back with recent signs of new job creation."

What gifts are likely to be hot for the holidays? Look for strong sales of jewelry, women's fashion in lively colors, new versions of classic toys and consumer electronics.

Jewelers, who got 32 percent of their annual sales in November and December last year, sense demand building. Neiman Marcus and Saks scheduled an almost continuous series of jewelry designer trunk shows. Saks had five in one week at its store in Tampa's WestShore Plaza.

Some jewelry chains this year trained salespeople to sell pricey jewelry as an investment as well as an indulgence. Others are boosting their advertising budget with diamond and engagement ring promotions for December, the biggest month of the year for people popping the marriage question.

Flash is a common jewelry theme among many big sellers this year: princess-cut diamonds, white or rose gold, semiprecious stones in cocktail rings. Glitzy three-tier chandelier earrings have made a comeback. Even pearls have been jazzed up, paired in necklaces with leather, platinum-enhanced silver or bezel-set diamonds.

"It's not bling-bling yet, but we are heading in that direction," said Tom Andruskevich, chairman and chief executive of Mayor's Jewelers, a chain of 28 stores. "The high-end jewelry market is performing well for the first time since 9/11. People don't feel guilty indulging themselves again."

Apparel retailers say designers have finally hit on colors and styles women want to buy. New shades of greens, rust, russet and even bright red have found an audience that for years has been offered a steady diet of pastels and neutrals but mostly black. "My favorite new hot color name is Muscle Car orange," said Carey Watson, vice president of advertising for Burdines.

Women's "statement" boots now come embellished with buttons, buckles and fur. Rugged outdoors casual wear from Columbia Sportswear continues to be a big seller in Florida. Some stores are pushing designer jeans such as Von Dutch, Diesel, Earl and Seven for All Mankind that the celebrities wear.

In men's and women's apparel, demand is rising for more serious-looking career outfits, some of them tailored, as the casual work clothes revolution ebbs.

"That doesn't necessarily mean neckties," said Sanderford of Dillard's. "It's dress slacks, a jacket and maybe a turtleneck."

The urban street look has emerged as a serious rival to the popular Quicksilver and Vans skateboard styles of casual clothing for young men. The fastest growing brands are Sean Jean, Ecko, South Pole and Phat Farm.

No craze has emerged on the toy front. But toymakers offer a variety of newcomers such as Mighty Beanz collectibles, nasty-looking Built To Rule Transformer vehicles and a cute, talking Strawberry Shortcake doll.

Stores are awash, too, with new versions of toy franchises that will not go away. A winged Barbie is decked out for an appearance in Swan Lake, GI Joe is celebrating his 40th anniversary with commemorative action figures from past wars, and Elmo now can do the Hokey Pokey, the Chicken Dance or Limbo at $25 each. In another attempt to revive the 1980s, Cabbage Patch babies and kid dolls are making a comeback.

In consumer electronics there are plenty of new products such as MP3 players, cell phones with built-in cameras and recordable DVD players.

Little of this matters, however, if consumers are not motivated to open their wallets wider. Market research companies say shoppers are getting into more of a spending mood after a two-year malaise.

A national survey of 17,000 consumers conducted by Deloitte LLC found 68 percent plan to spend the same or more than they did last year on the holidays. Those planning to spend less dropped by 5 percentage points to 32 percent.

"Consumers in the Southeast seemed to be more optimistic about their situation than the national average," said Marvin Lando, a partner with Deloitte's consumer business practice in Florida.

The Florida Consumer Confidence Index rose 13 percentage points to 95 in October, compared with a year earlier. The percentage who think it's a good time to make major household purchases rose to 81 percent, up from 70 percent a year ago. "The index has been lifted by people saying they feel better off this year than last year," said David Denslow, an economist at the University of Florida, which compiles the index.

Leo J. Shapiro and Associates, a market research company that tracks consumer trends for several national retailers, said its monthly surveys were relatively static.

"But our November survey picked up a shift in consumers' willingness to spend more on the holidays that was not there last November or the year before," said George Rosenbaum, the Chicago firm's chief executive. "It is a strong bullish sign for this holiday season."

Carol Meyrowitz, president of Marshalls and TJMaxx, uses her own barometer.

"Our Christmas decorating items have been turning over faster than last year," she said. "That's always a good sign."

- Mark Albright can be reached at albright@sptimes.com or 727 893-8252.

Retail rebound?

2003 - 5.7 percent*

2002 - 2.2 percent

2001 - 5.6 percent

2000 - 4.3 percent

1999 - 8.2 percent

1998 - 5.9 percent

1997 - 4 percent

1996 - 2.7 percent

1995 - 3.2 percent

1994 - 8.4 percent

1993 - 6.7 percent

*Projected

SOURCES: National Retail Federation, U.S. Department of Commerce, International Council of Shopping Centers