Holiday Retail: Winners and Losers

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Although toy stores may see a decline in business—the NPD survey shows a three-percentage-point drop in the number of consumers who say they'll shop at toy stores this Christmas compared with last—it doesn't mean parents will spend less on their children. The drop is accounted for by the fact that parents are buying more electronics for their kids. "Every year the traditional age at which a child gets his or her first iPod or cell phone goes down," says Cohen.

Kids Come First

"People never cut back on their kids," says Mitch Burg, president of the Syndicated Network Television Assn., a New York organization that makes holiday shopping predictions based on the number and type of retailers that purchase air time for commercials on syndicated TV series. "We're seeing a significant rise in retail activity. Target (TGT), Wal-Mart (WMT), J. C. Penney, Sears (SHLD), and Best Buy (BBY) are buying more advertising on syndicated TV." He believes that means healthy sales for value-priced gifts for children.

Google reports that with the approach of Black Friday—the day after Thanksgiving, which traditionally marks the beginning of the holiday shopping season—it's seeing a spike in online searches for products on Wal-Mart, Best Buy, and Sears Web sites.

Thanks to this year's emphasis on basics, the apparel market looks strong for children and adults, although it's not all about utility with respect to women's clothing. Carol Davidson says that while "black is the new black this year," clothing retailers will also see high demand for embellished articles. "It's sequins for day, sequins for night," says Davidson, an image consultant and personal shopper who owns the firm StyleWorks of Union Square in New York. "Capes and leggings are big this year, too. Teal is the newest big color."

For men, two classics are coming to the forefront, according to Davidson. "The vest and the cardigan are strong," she says. "A lot of cardigans are cut so they have a better fit now, so they're more popular."

Sending Fewer Cards

In keeping with the trend toward substantive gifts, the book market looks healthy, possibly bolstered by an escalation in price wars between Wal-Mart and Amazon.com this holiday season.

Gift cards, on the other hand, look like one of the season's losers. NRF's 2009 Holiday Consumer Intentions and Actions Survey suggests that holiday shoppers plan to spend $139.91 on gift cards in 2009, a drop from $147.33 in 2008, probably because of negative publicity about expiration dates and fees, as well as the public's fears that retailers will fail before recipients have a chance to use the cards.

Consumer conscientiousness notwithstanding, retailers both online and offline can expect the usual, if not more-frenzied, last-minute Christmas shopping rush. According to NPD, this year 19% more consumers indicated they would put off shopping until December.

"It seems that every year on Dec. 23 or 24, I realize that I forgot someone," says Buie, "and I shop in a panic."

Click to see BusinessWeek's 2009 Executive Holiday Gift Guide.

Rebecca Reisner is an editor at BusinessWeek.com .

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