Many retailers have more than the usual riding on sales beginning this Thanksgiving weekend.
The presidential election pushed holiday shopping later than usual because some toy and game makers held off on their big introductions for maximum attention. The aftereffects of Hurricane Sandy have included logistics problems and merchandise delivery delays. And some retailers, trying to keep inventory lean during uncertain economic times, have given themselves little room for error: shipments of holiday toys, for instance, are down 13 percent this year, to the lowest level since 2007, according to the global trade research firm Panjiva.
All of that makes for a particularly strange holiday season, retailers and analysts say.
“The election sucks all of the oxygen out of the room in terms of attention,” said Eric Hirshberg, the chief executive of Activision Publishing, the video game company. “A lot of the best media inventory goes to the candidates. It gets more expensive because there’s this premium demand from the candidates.”
Hasbro is adding more shades of its Furby toy through the end of the year, and Mattel last week introduced a new Monster High video game. Last year, Activision introduced its big Call of Duty release in early November. This year, though, it did not release Call of Duty: Black Ops II until Nov. 13.
“We were also worried that if we released Call of Duty before the election, no one would show up to vote,” Mr. Hirshberg said. (He was speaking facetiously, but given that the game’s retail sales were more than $500 million in the first 24 hours after it made its debut, he may have a point.)
And while retailers were expecting the election to delay some shopping, they were not expecting a storm. RetailNext, which tracks shopper traffic, said that store visits and sales in the Northeast were down about 25 percent during the storm and afterward.
Major retailers have said the election and Hurricane Sandy affected sales. Saks and Target said the beginning of November was choppy, and Macy’s said that the storm seemed to have pushed sales later into the season.
“Some of it is lost, most is postponed,” Karen M. Hoguet, Macy’s chief financial officer, said of demand. “It’s a question of timing.” And Kohl’s chief executive, Kevin Mansell, said the company typically experienced sales slowdowns pre-election and postelection, “and then the business kind of accelerates.”
The late introductions and delayed shopping put toy companies, in particular, in a difficult position: they were under pressure to make hit toys, largely via preorders and layaway, months before people would actually be buying them. Retailers and toy companies started trying to gauge demand early, looking for preliminary data on which items were unpopular and which ones were stars.
Walmart started layaway a month earlier this year versus last year, and Toys “R” Us also started holiday layaway earlier, giving the stores a jump on things. Amazon and other e-commerce sites are promoting tools like preorders, wish lists and gift registries — anything that can give them a sense of what people will buy as the Christmas season churns on.
Preorders are “an important tool to gauge customer demand, and get some feedback from our customers earlier in the process,” said John Alteio, director of toys and games for Amazon. Product introductions later in the year “can be challenging in the toy industry, so we have to draw some comparisons when we can and make the best estimate.”
Paul Solomon, co-chief executive of Moose Toys, which makes Micro Chargers and The Trash Pack, said preorders and layaway were becoming increasingly important. “It’s giving us a good read, early, as to how things are performing, and it’s even more crucial now to make a lot of noise about the brand earlier than in previous years,” he said.
“Preorders are kind of a cottage industry for games like Call of Duty,” Mr. Hirshberg, the Activision chief, said. The company began promoting the game in March, when it ran spots during the NBA playoffs.
In May, it released an ad featuring Oliver North, the national security aide at the heart of the Iran-contra affair and a consultant on the game, talking about the future of warfare. It accepted preorders starting in May. Through the summer, Activision revealed different facets of the game at various conferences, and this month it began running international television, outdoor, digital and mobile ads.
“There’s not a clean math equation that says this many preorders equals this many sales, but it’s confidence-building for us in terms of orders, in terms of production,” Mr. Hirshberg said.
John Barbour, the chief executive of LeapFrog, learned the value of early promotion after last year, when the children’s tablet LeapPad1 became a surprise hit. “It was very hard for me to gauge how successful it would be. Everyone took their best shots,” he said. By November and December, the LeapPad was selling out, and Mr. Barbour had to pay a premium to source tablet screens, and paid for airplanes to fly in extra inventory.
This year, he focused on early promotions that would translate into preorders and layaway, so toy retailers could accurately adjust their orders in time for the holidays. A good response early on means not just bigger orders from retailers, he said, but also more promotional support and more shelf space: it becomes a self-fulfilling prophecy.
“For retailers, it’s phenomenal. It brings demand forward, and they get a better read on what they’re going to need,” he said. When the LeapPad2 became available for preorders in August, it sold as much in two days of preorders as it did in its first week on sale last year, Mr. Barbour said.
He is being careful not to get too jubilant, though. “The penalties for having too much inventory are greater than the penalties for being a little bit short,” he said.
Still, some brands were ignoring the strange events of this holiday season and proceeding as usual. Stephen Bebis, the chief executive of Brookstone, said some products were becoming available in the final months of the year, but that was because of production delays, not strategy.
“People are still going to have to buy gifts for Christmas no matter who’s the president,” he said.
Election, Storm and Shaky Economy Affect Holiday Shopping
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Election, Storm and Shaky Economy Affect Holiday Shopping
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Election, Storm and Shaky Economy Affect Holiday Shopping
