Retail: Dreaming of a green Christmas

The holiday shopping season becomes an arms race retailers can't afford to end.

Costco shoppers might have fallen out of their flip-flops this August as they steered around carts full of jumbo jugs of laundry detergent and back-to-school supplies only to chance upon decorative Santas and pre-lit Christmas trees adorning the polished concrete floors.

Santa’s summer appearance, an egregious example of retail “Christmas creep,” prompted the Toronto Star to run a story on the subject and quote an annoyed Costco shopper. The warehouse chain’s Canadian president said the summer Santa was hardly an effort to push Christmas into August. “We always bring Christmas product early. Our members are used to this,” she said, adding no customers have complained. “We are also a wholesaler, and many of our small retail stores who buy from us want to see the selection early.”

While Costco may deny this is a clear-cut example of Christmas creep, the evidence is mounting that jingle bells are ringing ever earlier in the year. In the U.S., Christmas selling started in July. Toys “R” Us unwrapped the Santa decorations for its Shop Early & Save promotion featuring discounted toys, and Sears set up its Christmas Lane boutique online and in 372 Sears stores across the States.

Though well aware of the dangers of crowding out other traditional shopping occasions such as back to school — as well as potentially turning off or angering shoppers — retailers are looking to get a jump on Christmas because it can represent 20% to 30% of annual sales. The still-fresh memories of last year’s horrible season also push retailers to try ringing those bells earlier. In the U.S., retailers had their own nightmare before Christmas, as consumers sharply curtailed spending in the wake of the financial crisis. The average U.S. shopper spent US$431 on holiday gifts, down 50% from 2007, according to the American Research Group.

In Canada, figuring out just when the Christmas season starts can be tough. Department stores lost their market dominance decades ago, and the big, mostly U.S.-based specialty retailers tend to stick to their own holiday schedules. (The Vancouver-based Future Shop and Best Buy Canada chains say they traditionally wait for November before making Yuletide pitches.) “The bellwether has shifted; it’s mainly Wal-Mart that people will watch,” said Richard Talbot, principal of Talbot Consultants International. “I think once Wal-Mart goes, everybody will go.”

Based on that analysis, expect an early Christmas blizzard. Wal-Mart Canada, which kicked off Christmas promotions near the end of October last year, began its Christmas assault in September with the launch of a weekly selection of 10 different toys priced at $10 apiece each week leading up to Christmas.

“We are not decorating the stores for Christmas right now,” said Wal-Mart spokeswoman Susan Schutta. “We are featuring some items that would be for Christmas, and we are making our very promotional pricing earlier so that people can organize their spending.”

A 2006 Wharton paper described Christmas creep as inevitable, calling it an arms race that retailers can’t afford to end. “The competition among retailers means nobody wants to be second,” said Wharton marketing professor Stephen Hoch. “That moves the shopping season up a little bit more each and every year.”

In the end, though, retailers end up competing with themselves, or rather with the prior year’s same-store sales. “If you had a sale last year, you pretty much have to have the same sale again this year to see if you exceeded what you sold last year. This may be why retailers are putting up Christmas decorations and displays earlier and earlier. They’re looking not just at the quarter or month but every week and every day.”

Whether the rest of the Canadian retail establishment follow Wal-Mart’s lead of not, most believe sales have to get better. “This year for Christmas it shouldn’t be hard to look better than the last year,” said retail consultant Wendy Evans. While she understands Christmas creep better than most people, “I don’t want to hear a Christmas carol before Dec. 1.”