Stores employ various measures to ensure successful holidays
By Greg Botelho
(CNN) -- The economy is wavering, the nation is on edge, and the holiday prospects look uncertain. When have we heard all this before?
Try last fall, when a possible recession and fears of terrorism had many retailers begging consumers to notice them. But strong 2001 holiday sales left many merchants scrambling to restock their shelves.
And it could happen again, experts say, if retailers offer customers the right combination of service, style and value.
"People are thinking about so many things, it's going to take a lot to trigger that emotional buying habit," says James Detorre, president of the New York-based consulting firm Brand Institute. Companies "must be more creative (and) fun," Detorre said.
Most important, they have to be smart. Recognizing trends and understanding holiday shoppers' mindsets are key, say experts. Then there's the matter of attracting customers, be it with eye-catching window displays, cut-rate sales or advertising campaigns.
And once the shopper is in a store -- or logged onto a retail Web site, for that matter -- the wise retailer will help him or her find ideal gifts for everyone, and perhaps a little something for themselves as well.
An October report from a research group, The Conference Board, put consumer confidence at its lowest level in nine years, the product of a shaky stock market, unstable unemployment figures and the prospect of war with Iraq, according to experts. Economists forecast that another closely watched report, put out monthly by the University of Michigan, would show an increase in consumer sentiment in November, Reuters reported. The point is, companies don't know exactly what consumers are thinking or how much they'll spend this holiday season.
"They're really crossing their fingers because disposable income is so low," Detorre says.
The stakes are always high in November and December, when stores can rack up 50 percent of their annual sales. Add a staggering economy, and it becomes even more important.
"The holiday season is make-or-break," says Michael Morgenthal, the managing editor of Giftware Business, a magazine for more than 32,000 retailers. "Everything gets magnified to the nth degree at Christmas time."
Detorre says retailers, trying to accrue much-needed profits, will put up holiday-themed displays and offer sales earlier and more often this year. Stores may also have less to sell, stocking fewer items than usual in hopes of avoiding a costly surplus after December 25.
But Morgenthal says retailers should also take into account the inverse -- the possibility they don't have enough products and could lose out on profits. Last year's results, he says, suggest it would be imprudent to underestimate shoppers' resiliency, especially around the holidays.
"Smart retailers learned from last year and have increased inventory levels," says Morgenthal. "But from anecdotal evidence, it sounds like a lot of them didn't learn the lesson."
A 'gifting solution'
In a bid to boost profits, stores are employing new and traditional means to attract customers.
Window displays play a critical role in brick-and-mortar stores' success, according to Paco Underhill, the author of the best-selling "Why We Buy: The Science of Shopping."
Once a way to simply show what's inside a store, today's windows utilize more images, icons and words to convey increasingly complex messages. Retailers that don't make their external appearance a top priority do so at their own risk, says Underhill, especially this time of year.
"The store is a gifting solution," he says. "As you walk past the store, [a compelling window display makes] you think, 'That's a good place for me to get gifts.' You are almost imagining whether [the recipient] will say, 'Oh, that's really cool.'"
In-store displays have become larger and larger parts of retailers' strategy in recent years. From cardboard cutouts to intricate exhibits, it has grown into a $30 billion dollar industry because, says Underhill, "When it works, it works remarkably well."
Some stores, especially smaller "Mom-and-Pop" ventures, use customer loyalty campaigns, local advertising and community service to boost their public profile -- and, in turn, reach their customers. Jack Yan, head of an international media, communications and consulting company, says today's larger retailers should take advantage of all media, including the Web.
"The companies that will do well ... are those that have large cross-media campaigns," says Yan, president of Jack Yan and Associates. "Consumers investigate larger purchases online."
The holiday mindset
Smart retailers, moreover, think like a consumer. That means recognizing trends, helping the customer get what he or she wants and understanding shopper's mindsets during the holidays.
Around Christmas, consumers must gauge the likes, needs and style of gift recipients, picking items they may not know well themselves.
Darrell Benatar, the president of Surprise.com, a Web site offering gift suggestions for people addicted to caffeine, sporting a quirky sense of humor and more, says gift-givers should come up "with a unique thing about the person and really think, 'What do they need?'"
Tough economic times may lead some shoppers to side for utility, items that are practical if not exciting, says Benatar. Others may go for luxury products, in order to pamper recipients who may not have the time or money to spoil themselves.
Another theme this holiday season is the "nesting trend" -- decorating or otherwise invigorating the home. "More and more people are focusing on staying home -- entertaining or just chilling out," says Morgenthal. "People put so much money into their home, they figure they might as well spend time there."
Target spokesman Douglas Kline said that the chain's "home decor items have been enjoying significant interest and sales growth," as have electronics and entertainment-related products.
Last but not least, a well-designed store and well-informed, helpful staff can play a pivotal role in sealing the deal, so that a shopper finds and buys what he or she wants, quickly and easily.
"A lot of times you walk into a store, you don't really know what you're walking into or what you're looking for," says Morgenthal. "A savvy sales staff can coax that information out of the shopper and help them get something really unique that they'll be remembered for."