Fall 2005
Extending the Season

In recent years, many seasonal retailers have learned that it pays to stay put. Being open not just after Christmas but well into January takes advantage of post-holiday shoppers who pour into malls with gift cards, gift cash and refund money in hand.

The benefits of retailing beyond Christmas are many, says John Lash, design and marketing director for Calendar Club, LLC (Austin, TX). First and foremost, the benefit for retailers is in “maximizing our sales in strong malls,” he says. “As we mark down certain product, we continue to generate sales transaction volume.” In fact, 17 percent of his company’s sales are made in January and February. “But remember,” he adds, “all of these [January and February] sales are markdown sales.”

Markdown or not, they’re still profitable, and as long as they are, Lash says, those locations stay open. “When we close depends on the lease period and strength of the mall. If the mall is strong and we’ve got the opportunity, from a lease perspective, then we’ll stay open as long as we can,” he says. “The strength of the mall and [the] lease period drive closings as well.”

Product sometimes drives the decision, too. “The nature of the product often determines when we close. Aggressive markdowns, for instance, allow us to keep Calendar Club stores open,” he says, but for other company operations, such as Go! The Game Store, their product lines can generate strong sales anytime, even year-round. Many of their locations open well in advance of Black Friday, the day after Thanksgiving. “We try to open some stores in mid-August, then begin to ramp up early September,” Lash says. “We also try to open our Christmas stores early—September or October—as this season peaks well before December 25th.”

Is the mall “dead” in January? “Not by a long shot,” says Patrick Conroy, vice-chairman and national managing principal for Deloitte & Touche’s consumer business. “Consider this: For the last two holiday seasons, the January increase in non-auto retail sales has been the highest of the three-month period,” he says. For example, “November and December 2004 sales each rose 0.4 percent from the prior month, [but] sales in January 2005 jumped 0.9 percent.”

It’s a myth that the mall is dead right after December 25th, says Mary Anne Monast, assistant GM at Cool Springs Galleria (Franklin, TN) near Nashville. “The mall is not typically dead,” she says. “Returns, gift cards and even tax returns help January and February sales.” Last Christmas season, Cool Springs Galleria had 31 carts, 22 kiosk and 10 in-line tenants; 18 percent of those specialty-retail tenants stayed after the holidays to sell into January and February.

The Mall of America had 130 to 140 short-term tenants for the Christmas season last year, says Jeff Hawkins, MOA’s specialty leasing manager. And that number dropped by only about 10 retailers after January 31st, when most of the holiday leases expired.

The gift-card connection

Monast is right on the money with the gift-card factor when she says that retailers who stay after Christmas are in prime position to capture some of the multi-billion-dollar gift-card business at its peak. According to Deloitte & Touche’s second annual Post-Holiday Gift Card Survey (Feb. 2005) that looks back at holiday 2004, adults received an average of 3.2 gift cards, with an average total face value of $142.98. And of all the gift cards received by adults, 61 percent had been fully or partially redeemed by the end of January.

“The number of gift cards received per adult increased more than 20 percent over last year,” the report noted, and—here’s the salient feature—card redemptions “have likely boosted retail sales by an estimated $18 billion.” The report also estimates that “consumers are likely still holding onto another $9 billion of unredeemed value on their cards” as of early February.

And that alone is good reason to stay open. “Yes, temporary tenants do lose out if they leave at the end of December,” says Conroy. “Assuming these retailers have the capability to accept gift cards… then they’re losing out on the mall-wide gift cards and bank-issued gift cards that will be redeemed by shoppers in the early months of the new year.”

Hawkins says retailing post-Christmas is “great, because all of the kids are out of school… so nine times out of ten [kids and parents] end up at the mall… and everyone’s got cash or gift cards—disposable income.” Despite that the Mall of America is the granddaddy of them all, the patterns seem to hold in malls nationwide. The increasing redemption of gift cards in January “is making the month more important to the industry,” says Conroy.

Gift cards “also help sell new merchandise at higher margins,” Conroy says. “Our survey found that 70 percent of gift card recipients bought at least some full-priced apparel merchandise when they redeemed their cards. Assuming this result carries over into other retail sectors [and product categories], that’s a compelling argument for staying open into the new year and accepting gift cards from your consumers.”

Shoppers Gary Rosen and Tamra Fountain of Asheville, NC, say it took them until mid-January to shop for the candles they wanted for their newly renovated living room. When a family member gave them a $50 gift card for their local mall last Christmas, the couple headed for the candle kiosk that was still open. “We ended up spending about $65,” Fountain says. “We spent $15 more than the card was worth but we were happy as clams,” he says, illustrating what many retail analysts say is the propensity of cardholders: spending more than the cards’ face values. “Each year it seems like gift cards get more popular,” he says. And he’s right.

Post-season specials

Mall management is fast catching on to the value of the post-season season, and creating promotional events to draw in increasing numbers of post-Christmas shoppers. At the Mall of America—which, of course isn’t typical with its 42 million visitors a year but is often a retail trend-setter—Hawkins says the post-holiday buying period is strong partly because of special events and marketing efforts.

Last January’s MOA events featured the Minnesota Vikings; a well-known local home-décor TV personality; a nationally advertised contest for inventors; casting calls for several national TV shows; and a weight-loss campaign in conjunction with Dr. Phil. While smaller malls might not have a tie-in with an NFL team or Dr. Phil happening in January, they would be wise to book equally attractive local or regional celebs and create marketing promotions around them. “These events do draw traffic,” and specialty leasing tenants should take advantage of them, Hawkins says.

“The gift-card business is getting bigger and bigger,” says Hawkins, and it’s expanding nationwide. (“It’s always the right size and color,” he quips.) Thanks to gift cards, “January is no longer the weak, merchandise-clearing month it was five or more years ago,” Conroy says. In fact, it’s his view that the gift card phenom “almost single-handedly” changed that. “With more customers coming in… to redeem cards, January gives retailers an early opportunity to test merchandise for spring.”

Another factor driving traffic in January, says Monast, is the post-holiday advertising the bigger retailers do. “Major department stores sales and big corporate [chains]—Gap, etc.” motivate bargain-hunters, thereby drawing in customers who otherwise might have stayed home, she says. Hawkins sees it that way, too: “The more savvy [specialty retailers] take advantage of the value-conscious shopper who’s in the mall during those times. I think the temporary tenant who isn’t more savvy might not take that opportunity.”

Plan on January

But the opportunity is there, says Hawkins, and specialty retailers who want to extend the season next year should plan ahead and give it a shot. It might not only increase their bottom line—it might be the first step in taking their businesses to the next level.

Nancy Tanker

Nancy Tanker is the former managing editor of Specialty Retail Report. She has covered the specialty retail industry for nearly 15 years for a variety of publications and can be reached at srrtanker@mchsi.com.
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