Stores’ holiday take will be bigger, but not much

Merchants must work hard for a profit this Christmas, some say

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While merchants in Hawaii are remaining cautiously optimistic about the holiday season, sales are expected to grow less than average this year.

Holiday sales National projections for 2007: Season sales: $474.5 billion Increase over 2006: 4 percent Total weekend shoppers: 132.9 million Source: National Retail Federation

Despite a trend toward pushing holiday sales ever earlier in the year, it is the day after Thanksgiving, known as Black Friday, that traditionally kicks off sales for the holidays and sets the tone for the season.

In Hawaii many merchants, from Wal-Mart to CompUSA, Old Navy and KB Toys, are offering early morning hours - some as early as midnight - as well as special deals to bring in consumers.

But consumers are expected this year to be watching their pocketbooks as prices go up.

"Santa sees that spending power in Hawaii has been eroded," said local market analyst Marty Plotnick.

But Carol Pregill, president of the Retail Merchants of Hawaii, said that isle consumers are still showing buying power. "We're certainly in no recession," she said.

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Local retailers remain cautiously optimistic as they wait for Black Friday, the day after Thanksgiving, traditionally the kickoff to the holiday shopping season and often the busiest weekend of the year.

But knowing that sales nationwide are forecast to increase less than average this year, according to the National Retail Federation, some say competition for consumer dollars will be stiffer than usual.

A slowing residential real estate market and skyrocketing gas prices might have an impact on the pocketbooks of consumers this Christmas season, as well as the amount of disposable income they have to shed.

"Santa's going to have a soft landing this year," said market analyst Marty Plotnick, "because Santa sees that spending power in Hawaii has been eroded. ... Gasoline is a prime reason -- the cost of gasoline is coming right off the top of people's incomes."

It means dipping into credit for many consumers, said Plotnick, but he believes that the mainland subprime mortgage issues that now seem distant will eventually cross the Pacific and land on Hawaii's shores. He forecasts less impulse buying this holiday season.

"Merchants are going to have to work really hard to stay in the black," he said. Customer service will make a difference.

Retail analyst Stephany Sofos said that with gas prices going up, consumers are faced with the dilemma of whether to buy gas or toys.

While Hawaii's real estate market is not in the same straits as many places on the mainland, Sofos thinks the problems will cross over in the next six to nine months. She recently did appraisals for two homes in foreclosure.

The NRF forecast in September that holiday sales this year will increase by only 4 percent. That would be the slowest holiday sales growth since 2002, when sales rose 1.3 percent. A national survey by accounting firm Deloitte & Touche found that four in 10 consumers expect to reduce their spending this holiday.

Visitor counts also are down, said Carol Pregill, president of the Retail Merchants of Hawaii. But on the other end of the spectrum, Hawaii has a low unemployment rate and strong construction industry. "We're certainly in no recession," she said.

"Even though Waikiki may be soft, Ala Moana Center has more of a mix, and many of the neighborhood malls, including the newly renovated Windward Mall, Pearlridge Center and Kahala Mall have new stores."

Pregill said gift cards continue to do well and that she anticipates an increase in gift card purchases this year.

Retailers are pushing big-ticket items this year, like consumer electronics, including high-definition TVs, iPods, stereo sound systems, Nintendo's Wii and Sony's PlayStation.

Most stores had their holiday merchandise up early this year, before Halloween. Macy's held a one-day sale the week before Black Friday but is opening its doors early tomorrow.

Ala Moana Center is promoting "ThanksGetting Day" on Black Friday, according to a press release, with complimentary valet parking, bottled water and special discounts from many of its retailers beginning at 6 a.m.

Old Navy will open at midnight, while the Disney Store and Guess will open at 4 a.m.

"We expect our holiday sales in 2007 to keep pace with same-period 2006 sales, possibly ending the year with a low single-digit percentage increase," said Matt Derby, spokesman for Ala Moana Center.

Mall gift card sales are up 20 percent over last year, according to Derby, and Santa photo sales are up 15 percent.

Fred Paine, general manager of Pearlridge Center, said he was cautiously optimistic this year but that sales have been tracking positively throughout the year. Since last year the mall has added about a dozen new stores.

Sales this year are expected to be higher than last year at Kahala Mall, according to general manager Ron Yoda, mainly because the mall's theaters will be open and there will be fewer vacant spaces.

"Last year we had some dark spaces," said Yoda. "Apple was under construction, and this year everyone in the mall is open except for Whole Foods."

Kahala Mall has brought in Cinnamon Girl as a holiday tenant, while Banana Republic has a new space. The Apple store is expected be a big draw this holiday season, said Yoda.

"There are a lot of gloomy forecasts," said Yoda, "but once people get into the spirit, I think they'll be shopping like they usually do."

Black Friday shopping hours Many Hawaii merchants are offering early morning hours -- some as early as midnight -- to bring in holiday consumers. Here are some of the major ones: Ala Moana Center: Most stores open at 6 a.m. Old Navy opens midnight after Thanksgiving, while the Disney Store and Guess open at 4 a.m. Pearlridge Mall: 6 a.m. Windward Mall: Doors open 5 a.m., stores open 6 a.m. Kahala Mall: 9 a.m. (some stores open earlier) CompUSA: Thanksgiving, 9 p.m. to midnight; 5 a.m. on Friday Circuit City, Best Buy, Sears, KB Toys, Toys R Us: Open at 5 a.m. Friday Sports Authority: 5:30 a.m. Friday Wal-Mart: Keeaumoku Street store opens at 12:01 a.m.; all other locations open at 5 a.m. on Friday.