Winning Strategies

Last fall, when NRF announced its forecast of a 4 percent increase in holiday spending, some industry experts looked at us with raised eyebrows. Sure, 4 percent growth was lower than the 10-year average but, to some, it still seemed awfully optimistic. Though we might be proven wrong when sales figures are released later this month, I think the retail industry rose to the occasion when not many thought it could.

While 2007 holiday growth will be modest no matter how you look at it, getting consumers to spend for the past few months was an incredibly tough challenge — and retailers delivered. Without getting too deep into the numbers, I’d like to congratulate retailers on three small victories during the past holiday season.

Victory No. 1: You were promotional without going overboard. It was no surprise that consumers were going to be conservative with their pocketbooks last holiday season, looking for the best value and searching everywhere for that “I-can’t-believe-it-was-that-cheap” deal. By planning ahead for this state of mind, retailers were able to capitalize on spending. And by carving out special savings all season long, you kept customers coming back into the stores, which is never easy.

The types of promotions we saw this year were also precisely suited to shoppers’ penny-pinching sentiments. Instead of promoting the $1,000 televisions that were so popular last holiday season, you appealed to more moderate spenders by featuring lower-priced items like digital photo frames and GPS systems. (That said, I have no doubt there were more than a handful of consumers who splurged on that $1,200 Louis Vuitton bag at Saks.)

Victory No. 2: In the ongoing game of chicken between consumers and retailers, you won. By carefully managing inventory levels, you were able to avoid those panicked, wide-swept markdowns that we’ve seen in previous years. And, perhaps, you were holding off a bit on shipping some of that seasonal merchandise until after the holiday season, when $26 billion in gift cards was set to be redeemed.

Victory No. 3: You played it safe while still managing to experiment. Our spokespeople spend the holiday season telling reporters that retailers know consumers will spend, but the challenge is getting consumers to spend with them. Across the board, retailers impressed me with their creativity. Whether it was Home Depot’s award-winning, stylish fire extinguisher, the customizable gift cards at retailers like Macy’s and Dunkin’ Donuts or holiday-themed “webisodes” from American Eagle, many companies found a way to set themselves apart and get noticed.

But now it’s January, and your attention has likely turned to attracting customers to redeem gift cards or sprucing up sales of entertainment centers for the Super Bowl — and, hopefully, you’re making plans to attend NRF 2008, Retail’s BIG Show, in New York this month. Still, you’d be well served to take a moment to reflect on what you did right during the past holiday season: You might be surprised by how inspiring it was.