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Fall 2006 Guide to Holiday Profits 2006

Introduction and Statistics

Whether you’re a first-time specialty retailer with one kiosk, or a seasoned retailer with dozens of stores, our goal is to give you the information you need to plan an effective strategy for the season. Information you’ll need to establish realistic sales benchmarks, adapt to changing conditions as the season progresses and outperform the competition. To have the best season ever, you have to plan ahead. And then, as the saying goes, work the plan.

To that end, in this year’s Guide you’ll find key holiday statistics and buying pattern information, including details on selling techniques that really work, tips to boost early sales, holiday staffing advice, theft-prevention information, and even a few stress-reduction techniques you might want to use. Information that will make holiday business more efficient and your retail life more enjoyable.

Seasonal Stats

The 2004 and 2005 holiday seasons were retailers’ strongest in five years, according to the National Retail Federation. Although dollar sales have steadily grown over the last decade, (see graph below) take a look at the growth rate for 2000 to 2002 in the Holiday Retail Sales Growth chart (see graph below) and you’ll see that year-over-year growth above five percent is by no means assured. The NRF publishes its growth forecast for the 2006 holidays in late September, and the ICSC will release its forecast in late October.

Ten Times Bigger

The holiday season, (Nov. plus Dec.), is nearly 10 times bigger than any other buying season. Despite the continuing rise of gas and energy prices, and insecurity caused by world events, retail sentiment remained strong over the summer and into the fall. Experts agree that Internet spending will once again see double-digit growth, prompting some brick-and-mortar retailers to offer steep discounts early in the season.

Payment Methods

Last year marked yet another decline in consumers’ credit card use during the holiday season, with more shoppers opting to pay by debit/check card or cash. Checks were a distant fourth. But credit cards still make up nearly a third of purchases across the board. (Note: Starting next year, new federal regulations might affect how you process checks. Look for our article on that and other important payment-processing topics in SRR’s Winter/January issue).

Holiday Buying Patterns

When do consumers start their holiday shopping? Which weeks are likely to be the busiest this season? How much will consumers spend on gifts? Here are the stats you need to develop focused selling strategies for your business.

Perhaps the biggest key to a successful holiday season is getting a handle on holiday buying patterns, which affect stock level plans, staffing strategies, price points and your overall plan of attack. The International Council of Shopping Centers ( and the National Retail Federation, along with several consumer-research firms, have yet to publish their holiday forecasts as of SRR’s circulation date.

Many forecasts are released in late October and early November, and contain key information looking back at the previous holiday season—from how much was spent per consumer, to when shoppers made the most of their buying decisions.

Specialty retailers who want to get a jump on the season and formulate their strategies well in advance of the season often have to look at previous years’ statistics—from holiday 2004 and prior—to make educated guesses as to what might happen this year. Fortunately, consumer buying patterns for the holidays don’t tend to fluctuate wildly from one year to the next, so educated guesses can be very valuable.

2004 Holiday Sales, Weekly
Sunday, November 21 – Saturday, November 27: 13.3%*

Sunday, November 28 – Saturday, December 4: 16.7%

Sunday, December 5 – Saturday, December 11: 18.2%

Sunday, December 12 – Saturday, December 18: 22.5%

Sunday, December 19 – Saturday, December 25: 19.1%

Sunday, December 26 – Saturday, January 1, 2005: 10.3%

*Includes the Thanksgiving weekend rush

One key piece of information is when shoppers make most of their purchases. Below is a look back at the weekly distribution of holiday sales for 2004 and 2003, starting with the week that includes Black Friday, the date that most consumers consider the official start of the holiday buying season.

What are the busiest holiday shopping days likely to be this year? The International Council of Shopping Centers will release its prediction in late October.

In late November 2005, the NRF and BIGresearch announced that 60 million shoppers headed to stores on Black Friday, a 7.9 percent increase over the previous year. Another 52.8 million shopped on Saturday, a rise of 13.3 percent over 2004.

And They’re Off!

Another key indicator of buying patterns over the course of the season is consumer surveys. During the 2005 holiday season, BIGresearch and the NRF teamed up to survey more than 18,000 adults (over age 18) who were asked what percentage of their holiday shopping they had completed at three distinct points during the holiday shopping season. Here are the results, showing how buying progresses from early October through early December.

2003 Holiday Sales, Weekly
Sunday, November 23 – Saturday, November 29: 14.5%*

Sunday, November 30 – Saturday, December 6: 14.2%

Sunday, December 7 – Saturday, December 13: 16.6%

Sunday, December 14 – Saturday, December 20: 20.1%

Sunday, December 21 – Saturday, December 27: 20.6%

Sunday, December 28 – Saturday, January 3, 2004: 4.1%

*Includes the Thanksgiving weekend rush

Source: International Council of Shopping Centers’ ( 2005 Holiday Watch, with data from ShopperTrak ( National Retail Sales Estimate

It’s interesting to note that in early November, almost 80 percent of consumers reported they had purchased 25 percent or less of the gifts they planned to buy. And in mid-December, 15 percent had not yet started their shopping, while 12.4 percent reported they were finished.

How Much Will They Spend?

Top 10 Holiday Shopping Days
1. Saturday, December 18
2. Friday, November 26
3. Saturday, December 11
4. Saturday, December 4
5. Thursday, December 23
6. Friday, December 17
7. Wednesday, December 22
8. Tuesday, December 21
9. Wednesday, December 15
10. Friday, December 24

1. Friday, November 28
2. Saturday, December 20
3. Friday, December 26
4. Tuesday, December 23
5. Saturday, December 13
6. Monday, December 22
7. Sunday, December 21
8. Friday, December 19
9. Saturday, November 29
10. Saturday, December 27

At the start of each holiday season, BIGresearch ( surveys thousands of shoppers to find out how much they plan to spend on gifts for friends, family and co-workers. Here’s what shoppers told BIGresearch as they started their holiday 2005 shopping.

Consumers also spend big bucks on themselves during the holidays-a shopping segment often overlooked by retailers. According to BIGresearch/NRF data, consumers last year planned to spend an additional $17.7 billion on themselves, with men “the most generous when it comes to treating themselves, with an average male spending $108.87,” the NRF said.

How much do you plan to spend on gifts?

  • Gifts for family: $430.90 (up 4% from 2004)
  • Gifts for friends: $97.07 (up 9.1% from 2004)
  • Gifts for co-workers: $55.93 (down 2.6% from 2004)
  • Gifts for others: $91.33 (up 10.6% from 2004)

How much do you plan to spend on holiday purchases other than gifts?

  • Holiday Decorations: $59.57: (up 7.7% from 2004)
  • Greetings cards: $33.26 (up 11.8% from 2004)
  • Candy and food: $96.44 (up 6% from 2004)

Source: BIGresearch/NRF, 2005 holiday spending survey

Staffing for Holiday Traffic

Every year some specialty retailers have trouble keeping their staff motivated—especially salespeople who operate on commission—through a comparatively slow Novemberand are caught off-guard in December, with short-staffed locations just as sales reach their peak. You don’t have to be one of those retailers.

By staffing effectively you can avoid the pitfalls of the season and achieve maximum sales. The following tips will help you prepare for the coming holidays.

Use trial periods for salespeople.

Give each salesperson a trial period early in the season, during which you can analyze their sales skills objectively—their strengths and weaknesses. When the big rush comes, you’ll know which employees are the best ones to schedule during peak times, and your employees will know they’ve earned their allotment of shifts (a big motivator for those on commission).

Communicate with your staff.

Take the time to explain to your staff, especially those who operate on commission, how the holiday traffic flows—slow at first and then a huge portion of sales coming in mid-to-late December. Let your employees know that scheduling staff during Christmas for maximum results is a challenge and that you’ll be using trial periods during which you will be observing them in action. By sharing your strategy, you’ll gain employee respect and give them a better understanding of your business’s operations.

Use time profitably.

Greeting your customers is the first priority, of course. But when your employees are not making sales, they can still use their time profitably by fine-tuning displays, cleaning or rearranging stock, or checking inventory. Make sure you tell your employees exactly what you want them to do when they have “down time.” Also make sure your employees know you want them to avoid “visiting” their retail neighbors. And do the same yourself—if they see you visiting, they’ll want to do it, too.

Skip the pity-parties.

During slower times in the beginning of the season, your retail neighbors might want to chat—sometimes just to complain. Don’t take the bait! Commiserating creates “pity parties” that just sap everyone’s strength. You don’t need that. Instead, focus on making sales, because that’s what you’ll put in the bank.

Reward your staff.

You can make your employees proud to be part of a professional, winning team by complimenting them when they deserve it and rewarding extra effort with small incentives, such as mall gift certificates. Also, although it’s important to be economical in how many employees you schedule during start-up, be considerate: Take over operations as necessary to give your staff breaks. Keep costs low, but morale high. Your customers will reward you for it.

Keep a positive attitude.

Because such a large portion of your sales will come in the two weeks before Christmas—perhaps as much as 50 percent—it’s important that you stay calm, focused and positive in the weeks before the big rush.

At some point in mid-November you might seriously wonder if shoppers will ever show up. Although you might be feeling the anxiety of slow sales at the beginning of the season, it’s important to remember that as the business owner you set the tone for your employees. Showing anxiety to your staff won’t help. Instead, you’ll be setting the tone for long faces, which will affect customers’ perceptions of your business. Once that happens, it will be very difficult to transform frowns into warm smiles that welcome shoppers. Instead, have faith and no matter what you’re thinking, look happy—the Grinch will not steal your Christmas. Your sales will come.

Service Sells!

Up-selling and add-on selling are especially important during the short holiday season, when the right sales techniques can mean the difference from being in the red or the black.

Up-selling vs. add-on selling

Although up-selling and add-on selling are sometimes used as interchangeable terms, there are differences between the two selling techniques:

Up-selling includes:

Showing the customer the better-quality, higher-priced item. Example: a 14K-gold ring vs. a gold-plated ring

Showing the customer a larger or bigger version of the product. Example: a 16 oz. bottle of lotion vs. a 12 oz. bottle

Add-on selling includes:

Selling additional merchandise that relates to the initial product being purchased. Example: a handkerchief to go with a tie

Selling the customer more of the same item. Example: a set of three pairs of socks vs. a single pair

Some salespeople mistakenly think that add-on selling and up-selling techniques are designed to manipulate customers into buying items they don’t want or need. Like any retail sales technique, add-on selling and up-selling can be used to manipulate the customer. But when properly used, these tools can thrill the customer (when they can get a bargain, for example, or a higher-quality product that will serve them better) and enhance the overall shopping experience. If both strategies are used with the customer’s best interests in mind, salespeople can deliver attentive and responsive customer service while landing sales and increasing profits.

One of the biggest mistakes salespeople make is thinking: “If the customer wants something or has a question, they’ll ask.” Not so! This is reactive selling-a strategy that does not drive sales. Nor does it make customers feel like they’re receiving superior customer service.

Need proof? According to a December, 2005 shopper survey by workforce-management company Kronos Incorporated and market researcher Harris Interactive, 85 percent of consumers said they are more likely to purchase additional products if they interact with a knowledgeable sales associate. Salespeople must adopt a proactive approach that involves educating customers, making them aware of product benefits and suggesting additional buying options.

Do’s and don’ts

Here are a few Do’s and Don’ts when it comes to add-on selling and up-selling:

DO ask questions and share information with customers.
Rather than simply showing the best (or highest-margin) merchandise first, salespeople should begin by asking targeted questions to determine customers’ wants and needs. Asking questions not only helps salespeople determine buying motives, but also will make customers feel understood-and when customers feel understood, they are more inclined to listen to a salesperson explain other buying options, including higher-priced merchandise that might serve the customer better.

DO make sure all salespeople know the up-selling and add-on options for each product.
Every salesperson should know what additional products “go with” a certain item for add-on sales, and what the higher-priced options are for up-selling. A lack of training in these areas will results in lost sales. Smart salespeople are always eager for opportunities to remind customers about additional purchasing options or to explain why a higher-priced item may make a more suitable purchase.

DO remember that up-selling leads to increased satisfaction.
In general, consumers are more satisfied with higher-quality merchandise than they are with “value” merchandise. When sales associates up-sell customers to higher-priced merchandise, retailers not only increase their
sales but customer satisfaction as well. Over time, increased customer satisfaction means customer loyalty, repeat business and great word-of-mouth advertising.

DO make a smooth transition to showing additional merchandise.
Examples include: “I’ve got something great to show you,” or “Let’s take a look at [product X] to go with your new [product Y],” or “Let me show you the accessories you’ll need to operate and take care of your new [product].” If the customer is not interested in hearing about add-on merchandise or higher-priced options, that’s fine, but sales associates should never decide not to show a product just because the customer did not bring it up first. Salespeople must take the lead and suggest products and services to their customers.

DO remember that during the holidays, customers are shopping for many people-including themselves!
Once a customer has chosen a product for someone on their holiday shopping list, a simple question such as, “Is there anyone else on your holiday list that would enjoy this [product] too?” or “Would you also like to get one of these for yourself this year?” can increase sales tremendously with very little effort. The Kronos/Harris study mentioned above also revealed that 45 percent of survey respondents said that they also shop for themselves during the holiday season. The more that salespeople can help customers fulfill all of their holiday shopping needs, the better the customer will feel-and the fuller the cash register will be.

DON’T start the up-selling process at the register.
Effective up-selling should start long before customers reach the cash wrap. Customers appreciate advice and recommendations while they’re shopping, not paying. When customers are at your register, they want a smooth and prompt end to the transaction. In the customer’s mind, up-selling at the register demonstrates you care only about selling to them rather than serving them. Up-selling at the register is not proactive, customer-focused behavior, it’s simply annoying. And that means that the last feeling that your customer will have before leaving your store will be negative-the opposite of what you’re aiming for.

That said, there’s nothing wrong with limited add-on selling at the register, such as offering, “We also have the batteries you’ll need for your new [product].”
For common items such a batteries, keep in mind that the stock should be at the register, so the customer doesn’t have to wait for the salesperson to retrieve the additional items.

DON’T end the sale by asking a question.
The most popular (and ill-advised) way of ending a sale is by asking, “Would you like anything else today?” This question almost always elicits a curt “No” and brings and abrupt an end to your customer interactions. In fact, salespeople should never be the ones to end the sale. Only the customer should end the sale, and the salesperson shouldn’t beat the customer to the register. The customer will always signal when they are finished shopping.

DON’T assume salespeople can effectively use these strategies without training.
When it comes to maximizing sales, owners and managers tend to say, “We need to increase sales,” but then fail to train their people on how to accomplish that goal. Salespeople need to be taught what up-selling and add-on selling is (serving the customer) and what it is not (blindly suggesting more merchandise). Try on-the-floor coaching or role-playing customer interactions to help your salespeople learn the difference, practice their skills and gain some confidence. Your training efforts will be rewarded with increased sales.

Focus on the customer

Up-selling and ad-on selling aren’t just about getting customers to buy more product. These techniques are designed to fulfill customers’ needs, whether those needs are getting a bargain, buying a higher-quality product, or merely having a positive, productive interaction with sales staff. The bottom line benefit is increased sales, but the focus is really on fulfilling customer wants, needs and desires. Specialty retailers who keep the focus on the customer and use up-selling and ad-on selling whenever possible will close out 2006 with a healthier bottom line and happier customers who will spread the word about what a wonderful store they visited.

Discovering Buying Motives

Many salespeople assume that their main function is to tell customers about the features and benefits of the products being sold. But truly successful salespeople know that selling has much more to do with asking questions than listing product features. Asking questions helps salespeople determine what the customer’s buying motives are, so the salesperson can recommend the right type of product to meet (or exceed) the customer’s needs. Recommending merchandise before determining a customer’s buying motives is akin to a doctor writing a prescription before determining what the symptoms are.

Changing perceptions

In addition to discovering wants and needs, asking questions also has a profound effect on the customer, changing their perception of the salesperson from adversary to advisor. Asking questions shows the customer that the salesperson cares about finding the right product for the customer-not just any product.

imageAt the beginning of any sale, it’s important that salespeople explain that they need to ask a few questions, and why they’re asking these questions. Usually, this only requires a short to-the-point statement such as, “Let me ask you a few questions so I can help you find the item that’s best for you.”

The best questions are open-ended questions (those that can’t be answered with a “yes” or “no”) that focus on lifestyle and personal preferences. Questions about a customer’s likes and dislikes as they relate to the products they’re looking for, as well as how they plan to use those products, are valuable tools in ascertaining buying motives and will go a long way toward closing the sale.

Sample questions

Here are a few examples of good questions to ask. Some might be appropriate for one type of product but not another; use this list to develop your own personalized questions and work with your staff on how to ask these questions effectively.

  • Tell me how you’ll be using the [product] you’re looking for.

  • Of the [similar products] you own, which you do like best and why?
  • What colors or color combinations do you like?
  • What scents appeal to you the most?
  • What’s most important to you when it comes to [the product]?
  • Describe your ideal [product].
  • If price were no issue, what features would the perfect [product] have?
  • Is there anything else I need to know to help you choose a great [product]?

As you develop the appropriate questions for you and your staff to ask customers, keep in mind that salespeople who rely exclusively on sales scripts or techniques can appear mechanical or stiff. Selling is both an art and a science. The best way to master the skill of selling is to practice the process-the “science” of it-until it looks like art.

To connect with customers, salespeople must learn to incorporate their natural selves into their interactions with shoppers. Keep this in mind as you attempt to learn-and master-how to discover your customers’ buying motives.

Reduce Your Holiday Stress

When shipments don’t show up on time, employees go AWOL, and customers are less than courteous, there are effective techniques you can use to lower your stress levels.

Stress-reduction techniques are not only good for you-they’re good for your bottom line. After all, if you’re losing your grip, employee motivation can plummet and customers may decide to shop somewhere else, where there’s a more positive holiday vibe.

Here are a few tips to keep your cool, compliments of the University of South Florida Counseling Center for Human Development:

Progressive relaxation.
Progressive relaxation of your muscles reduces pulse rate and blood pressure as well as decreasing perspiration and respiration rates. Typically, it involves tensing individual muscle groups for several seconds and releasing the tension, allowing the muscles to gradually relax.

imageDeep breathing.
Sit in a comfortable position and take deep, measured breaths, inhaling while counting from 1 to 4, then exhaling while counting down from 4 to 1. Do this 20 to 30 times and you’re sure to feel refreshed.

Get into a comfortable position, close your eyes and visualize a scene or place that you associate with safety and relaxation. It doesn’t matter what you visualize, as long as it’s calming to you. As you relax your mind, your body also relaxes.

Assertive skills.
Be specific and clear about what you want, think and feel. Deliver your message in a clear and non-blaming manner. Ask for feedback and cooperation. Being assertive means being able to express yourself openly, honestly and directly while being considerate of others’ feelings. Being assertive increases self-satisfaction, respect from others, self-esteem and confidence.

Here’s to a profitable-and harmonious-holiday season.

Tips to Boost Early Sales

Generate sales early to make the most of a short selling season.

Just because consumers tend to buy late in the holiday season, that doesn’t mean you have no tools at your disposal to prompt early sales. Here are a few ideas to get you started.

Offer incentives to buy early.
Be sure to have a few (mall-approved) signs advertising your early-bird deals, such as a “Gift With Purchase of $50 or More Before Thanksgiving” or “Buy 1 Get 1 50% Off Before Thanksgiving.” Promote a free gift-wrapping service for early purchases, too. (And pre-wrap some gifts for shoppers who want to “grab and go.”) Consider signage that will create a sense of urgency, such as: “On Sale While Supplies Last!”

Advertise in local media.
It can pay off big-time to advertise your grand opening. Be imaginative to find effective ways to reach your target customers. Consider local school and church bulletins that accept ads, if your product is right for those publications. Print inexpensive flyers to announce a special sale such as “Grand Opening Sale!” or “Buy Before Thanksgiving!” Place advertising on a local sports- or talk-radio station, if those programs will help you reach your target market. Use the stations’ in-house advertising departments to help you produce a great ad to a highly targeted audience.

Tap into the mall audience.
Don’t overlook the mall’s self-contained community-it’s definitely in your best interest to let all mall employees know about your location and your products. Find out if the mall has an internal newsletter in which you can announce an “Early Buyer Discount” to mall employees. Spend some time shopping in your mall and letting fellow retailers know you are their retail neighbor.

Try reciprocal coupons.
Consider offering reciprocal coupons with a fellow retailer whose products appeal to your customers. If you have a kiosk that sells makeup for teenaged girls, for example, and your retail neighbor sells handbags to the same audience, print up 10%-off coupons for your makeup customers to buy a handbag, and vice versa. Take a good look at your retail neighbors to determine which ones will make good coupon partners. The cost is minimal and the chance to gain additional sales is tremendous. There might be several great partnerships that are just the thing to boost.

Think Shrink!

Last year retailers lost more than $37 billion to shrinkage in its four major forms: employee theft, shoplifting, administrative/paperwork errors and vendor fraud. That’s according to the National Retail Security Survey, the most authoritative source of empirical data on retail loss-prevention, asset-protection and the security activities of major US retailers.

The Survey is conducted annually by Richard C. Hollinger, Ph.D., professor of criminology, law and society at the University of Florida in Gainesville (, who says the biggest mistake retailers make year after year is “assuming that shrinkage is coming from shoplifters as opposed to employee theft.”

Most retailers, “particularly small retailers, refuse to recognize that they have [an employee theft] problem,” he says. “Not that they don’t have a shoplifting problem-it’s just that their focus tends to be on cameras and tags, and not recognizing that the person standing next to them whom they’ve been trusting, might be taking from the till.”

imageHe adds that “alert, conscientious employees” are better at detecting employee theft than any technology on the market. “In fact, we just did a study that we published in Security Journal, where we looked at all the different factors related to shrinkage, and we found that by far the most significant factor is turnover. If retailers can reduce their turnover and get a dedicated employee who is there for the long-term,” they can cut their losses significantly. “The employee who’s there for the short-term doesn’t internalize the loss, doesn’t view it as a cost to him or herself, doesn’t really care if fellow employees are stealing, doesn’t care if shoplifters are stealing, and is more likely to give merchandise away to friends,” Hollinger says. “If a retailer came to me and said I’m having a [loss] problem… give me one thing I can focus on, I’d say: turnover… The way retailers shoot themselves in the foot is the churn of employees. If they can cut down on the turnover, it will have a massive impact on both the shoplifting and the employee theft.”

But that doesn’t mean that loss-prevention technologies aren’t valuable and shouldn’t be used, even by small retailers with limited budgets. Loss-prevention systems were once very expensive, but “the cost barrier is going away,” he says. “Virtually all the technologies that the major retailers are using-with some exceptions like mainframe analysis and that sort of thing-have now percolated down” so they’re inexpensive enough for small retailers. Small retailers now have the ability to buy merchandise that arrives source-tagged from the manufacturer, purchase inexpensive used POS and tag-system equipment, and set up digital camera systems that are so cheap “they’re almost giving them away, and you can hook them up to the Internet for a fairly low amount” of investment.

Make this the year that your business cuts down on the shrinkage and beefs up the profits. Shrinkage is loss that “comes right out of the pocket” of the retailer, Hollinger says. “It’s almost like a home burglary.”

Staying Put in January

Consumers’ interest in gift cards has soared over the years, fueling January sales and creating additional opportunities for specialty retailers.

If you’re a holiday-only retailer who just finished up a great season, with shoppers responding to your products and strong sales in the bank, why close up shop at the end of the year when there’s a big chunk of sales to be had in January-and beyond? According to the International Council of Shopping Centers (, consumers purchased more than $18 billion in gift cards in 2005, up 6.6 percent from the year prior. Between the day after Christmas and the end of January, roughly 60 percent of those cards were redeemed, the vast majority in January. Researchers at the ICSC say gift card shoppers spend big bucks on themselves during January and while some look for bargains, others are more than willing to pay full price.

Shoppertrak, the shopper-counting firm, reports that mall foot traffic was up 3.1 percent in January 2006 compared to January 2005.

Take a close look at your products, operations and profit potential for January. It might be worth it for you to stay put after the holiday season and ring up those additional sales.

Gift Cards Fuel Sales

  • $135.28: Average spent on gift cards for the holidays

  • 51%: Percentage of shoppers who purchased gift cards
  • 4.49 Average number of gift cards purchased per person

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

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