November 10 2006
VALUE PAWN & JEWLERY FORECAST: HOLIDAY SALES EXPECTED TO IMPROVE

Forecast: Holiday sales expected to improve

UCF study predicts spending will be up 2% in 4Q

Orlando Business Journal - November 10, 2006

by Toni Daylor

Contributing Writer

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While Black Friday is fast approaching, retailers this year aren't waiting until the day after Thanksgiving before they begin their holiday shopping push.

Since many depend upon revenue generated during November and December to meet their projected annual sales forecast, efforts to entice consumers to their stores actually started months before the first piece of Halloween candy was handed out.

Christmas decorations and holiday-related items started showing up around town earlier than ever, and local malls this week are busy getting their decorations up to remind shoppers that Christmas is just around the corner.

That's probably a smart strategy this year, according to a forecast released late last month by Sean Snaith, director of the Thomas D. Garafolo Institute for Economic Competitiveness at University of Central Florida. Snaith's forecast predicts that 2006 will be decidedly better than last year as far as consumer spending because shoppers may be willing to part with more of their money thanks to not being bombarded at the pumps with $3-and-higher per-gallon gas prices.

Other factors -- such as the stabilization of the housing market, lower inflation and lower unemployment rates -- also may play a role as to why consumers will hit the stores and spend more this year, Snaith says.

The good news for retailers, he says, is that in weighing all those factors, consumer spending is expected to grow about 2 percent during the fourth quarter of 2006.

To entice those shoppers, local retailers are using a variety of strategies.

Take Value Pawn and Jewelry, which starts its holiday push with a Christmas in July event that allows customers to take advantage of a layaway plan for gift items.

Though a pawn shop may not be everyone's holiday shopping destination, Woody Whitcomb contends that there is some misconception on what services and products his company provides.

"We like to think of ourselves as a specialty retailer," says Whitcomb, chief financial officer for Value Financial Services Inc., the privately held company that owns and operates the nation's largest pawn chain. Whitcomb says two-thirds of his company's revenue is generated from the sales side of the business rather than the lending component.

For 2006, "Our same-store sales are up 20 percent from what they were last year, and we have no reason to believe that December sales will not follow suit," Whitcomb says.

As to the Christmas in July event, "It works out really well for our customers because they get to shop early and have nearly five months to pay for their purchases," he says.

Meanwhile, for Timothy Seaman, owner of the Gran Cru wine shop, the holiday spending season is all about his loyal base of customers.

"Wine is a very popular gift item, and we see our monthly revenues triple beginning in November and carrying through January," says Seaman.

In addition to the selection of wines and gourmet food items, Gran Cru entices buyers by providing a custom gift basket service, personalized engraving capabilities and special in-store holiday events. On Dec. 9, Gran Cru will host a wine tasting featuring 60 varieties of wine for participants who donate a toy to the Toys for Tots program.

"This is a great way to get people into our store and support a wonderful cause at the same time," says Seaman.

Besides trips to retailers' stores, expect online purchases to continue to be a growing sector this holiday season, Snaith says.

That's because online shopping allows people to comparison-shop among dozens of retailers, eliminating the need to drive from place to place to get the best price. With information only a couple of clicks away on the mouse, Snaith says that turns the table in favor of the consumer, and retailers will need to respond by pricing their items aggressively.

Whether they plan to beef up their inventory, advertise blowout prices or offer specialty services, retailers are poised to take advantage of the upswing in holiday spending, according to the UCF forecast.

And one added bonus for retailers: Compared to 2005, there is an extra shopping day between Thanksgiving and Christmas this year.