March 8, 2007
Green and the Retail Pot O’ Gold
By Tom Ryan
Come St. Patrick’s Day, revelers are expected to pull out their wallets for a cornucopia of purchases beyond green beer.
According to the National Retail Federation’s (NRF) 2007 St. Patrick’s Day Consumer Intentions and Actions Survey, consumers will spend an estimated $3.76 billion on St. Patrick’s Day. That figure, which includes money spent in bars and restaurants, is up from estimated spending of $2.69 billion in 2006 and nearly double the $1.94 billion spent in 2005.
The average consumer is expected to dish out $34.89 celebrating the holiday compared to last year’s $27.94 and 2005’s $22.95.
The retail industry group said the projected hike in spending reflects the increasing popularity of the holiday and one other x-factor.
“With St. Patrick’s Day falling on a Saturday this year, Americans will be in the mood to celebrate,” said NRF president and CEO Tracy Mullin. “In addition to traditional retailers, St. Patrick’s Day will provide a great opportunity for restaurants and bars to see sales increases.”
But the trend also reflects increased overall spending around holidays as a whole. For instance, consumers spent an estimated $4.96 billion on Halloween this past year, up from an estimated $3.3 billion in 2005. With the jump, Halloween became the sixth-largest spending holiday after: Winter Holidays ($457.4 billion estimated), Valentine’s Day ($13.7 billion), Easter ($12.63 billion), Mother’s Day ($13.8 billion), and Father’s Day ($9.01 billion).
According to the St. Patrick’s Day survey, the most popular way consumers plan to celebrate is simply by wearing green (82.6 percent). Nearly one-third (30.5 percent) said they planned to attend a party at their favorite restaurant or bar, though 33.9 percent planned to stay home to make a special dinner. Nearly 17 percent will attend a private party and 22.2 percent will decorate their home or office.
In response, retailers this year are offering a wide amount of product beyond green T-shirts, party supplies, and corn beef. Old Navy and Target are offering shamrock underwear and pajamas. Urban Outfitters is selling vintage Irish-themed T-shirts for $28. Dierbergs Markets in Chesterfield, MO, launched an “Everything-Irish” Celebration Menu campaign offering made-from-scratch Irish meals.
At Wal-Mart, consumers can buy the St. Patrick’s Day Pampering Spa Basket ($24.86) featuring shamrock cookies, green tea body cream, green tea bath salts, green tea bath soap, bath fizzers, green pillar candle, chocolate shamrocks and a chocolate coin. Other non-traditional items increasing in popularity include greeting cards, shamrock cookie cutters, gift baskets and pet products.
While the retail opportunity seems evident for non-traditional holidays, the risks are different than the traditional winter holiday season. Peak selling is only done a few days before the holiday and then steep liquidation sales are required the day after.
Discussion Questions: What do you think of the growing retail sales opportunities around holidays such as St. Patrick’s Day? How can retailers best capitalize on such opportunities while minimizing the risks of the short selling period?
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When I was a bartender in the early 70s and responsible for chalking cleverness on the blackboard behind the bar, on St. Patrick’s Day I always wrote, “Erin, go bra-less.” (Is everyone keeping up?)
There are those of us who dispute the whole idea of specified sainthood, but let’s allow that snake to slither into the ocean along with Patrick’s other urban-legend victims.
I”m a corned-beef, reuben sandwich guy, having been taught how to prepare them properly as a chef during college and after dining at the Carnegie Deli in nyakcitty. I serve them frequently to friends, family, and guests; send home stacks of them in Tupperware containers with guests after we dine (I never get my Tupperware back); and hate having to search for corned briskets in supermarkets near St. Patrick’s day because the nimrods (please look up the word “nimrod”) have already cleaned them out. They take the briskets home and abuse them along with the cabbage they believe is traditional to this particular day of the year. Travesty. (By the way, “corned” comes from the same root word as “salt,” meaning “kernel” or “central.” Thus, corned beef [not “corn beef”] has nothing to do with corn, but everything to do with salt.)
But I digress.
When I was with Kroger, we supported Secretaries Day strongly and invented Sweetest Day so we could sell more fresh florals. There’s nothing new about retailers inventing pseudo-holidays. Presidents’ Day was consolidated for a reason–retail, not convenience. How long until MLK Day is consolidated into another “holiday?” And by the way, what are the appropriate comestibles for supermarkets to promote near MLK Day? Inquiring minds want to know.
Short selling periods are mostly the responsibility of suppliers, not retailers. There’s “guaranteed sell,” “double-supply-calls” during critical periods, and just plain old supermarket muscle. Supermarkets rarely lose during so-called “holidays” on sales of so-called “holiday items.”
As with all holidays, start early. Talk about your strategy with your team and set expectations with suppliers. Get focused on what your customer will need to execute a good experience. Be an event destination. Birthdays, anniversaries, and big games happen every day. There are certain products that are needed for every holiday. Stay fresh and keep the destination items easy to buy.
More and more families and individuals are using holidays that have traditionally been non gift giving to give themselves and others presents. I have observed this with many people I know and believe this is a growing trend. Retailers can leverage these short selling period holidays by minimizing holiday specific merchandising and featuring related everyday items that can be thought of as holiday related; such as green items on St. Patrick’s Day.
Chicago having a fair Irish representation as well, the local Costco had corned beef in the end aisle meat case and Bailey’s stacked high in the liquor aisle. And at 6′ 2″, I still had trouble reaching to the top of the Guinness display to pull down the key ingredient in an “Irish breakfast.” A late night web search of places to celebrate the 17th showed every pub and restaurant with an Irish name from the south side to Milwaukee saying “No Reservations accepted” and “music starting at 10 am.” It will be a sloshing Saturday in Chicago to be sure….
Creating in-store excitement at retail through creative displays and promotions drives sales. So tying in with seasonal events, like St. Patrick’s Day, is a great idea. But is it a big enough event on its own? When I think of St. Patrick’s Day, I think of green beer (and drinking it, of course!), pubs and wearing green (although I would never buy a shamrock t-shirt for the event).
For retailers who have a permanent seasonal display, or if they “greet” shoppers at the front of the store with exciting displays, a spring theme may have a bigger impact. St. Patrick’s can be included in the spring theme, along with Easter, spring cleaning, and even gardening and/or bbq. This gets shoppers excited for spring. Then they make impulse purchases, based on all the ideas you have sparked up through the creative displays.
St. Paddy’s Day is just one more example of the business potential that is frequently under-exploited around key holidays or seasonal events.
The best way to capitalize on this potential is through careful planning and well-managed execution.
See the GMDC study Dan Nelson mentioned for the details on how to do it.
It is not just that people will spend more on St. Patrick’s day this year, there is also a subtle shift in retail consumption seasonality over the last four years or so. A quick analysis of the detrended Retail Sales series produced by the Census Bureau will show that less and less of total retail sales spending is being accounted for by the traditional holiday months (October through January), although these months still account for the bulk of total retail spending on an absolute basis. On the other hand comparing the seasonal index for the months of February through April and June indicates an increase of spending in these months over the last four years. So the learning is probably not that consumers are spending on other holidays, but that spending is actually shifting away from months that were traditionally considered as ‘holiday months’ (all of this is on a detrended basis, which should adjust for wage growth and inflation).
There’s obviously a lot of business to be gotten by merchandising around the key holidays such as St. Patrick’s, Valentine’s Day and Halloween. Here are a few “mirror tests” for retailers who want to capitalize:
1. Am I prepared to buy and distort this category so it makes a visual impact in my store? Will the customer be able to find it?
2. What does my marketing plan look like? Will there be print advertising to support the effort, in-store visuals, or some other tactics? If I’m big enough, do I use broadcast to establish a “headquarters” positioning for holiday goods?
3. Have I done my homework in terms of financial planning? What sort of sellthrough do I need to be profitable before I mark down the goods, do I have enough initial markup to support an exit strategy, and when do I need to aggressively take steps to move the inventory?
The stores that are capitalizing on this growing trend are planning and executing their way to success. There are risks involved in the exit strategy for seasonal goods, but plenty of rewards in terms of incremental volume and traffic.
Hailing from Boston, where St. Paddy’s is a major social event some call “Irish New Year’s,” I can say that indeed there is a lot of money tossed around on March 17. That said, most of it is on eating, drinking, and possibly some party favors. Restaurants and bars can safely promote St. Paddy’s as a fun night out and stock up accordingly. Other retailers can minimize the risk of the short selling season by sticking to the basics and not overdoing it (the Wal-Mart spa kit is borderline). Another questionable example is the St. Paddy’s T-shirts sold at Old Navy. Irish-Americans are concentrated in cold weather spots (Boston, New York, Chicago) where nobody wears a T-shirt till May. It might be a good time for apparel retailers to stock up on the Notre Dame and Boston Celtics sweatshirts, though. Slainte!
GMDC recently released a very extensive study on Seasonal Best Practices which highlights the importance of seasonal and Holiday sales. Several categories experience high double digit growth around peak Holidays, and savvy retailers build a Holiday “destination” in highly visible store locations to ensure their shoppers buy all their Holiday needs at one convenient stop.
The trends clearly indicate that consumers will make strong holiday purchases on specific items in close proximity to key Holidays like Valentine’s Day, Mother’s Day, July 4th, etc. Understanding those category spikes and ensuring shoppers are aware of your one stop location is critical to maximizing success.
The hardest thing about any holiday: figuring out how to be creative. It’s much easier to repeat what you did last year, and that’s boring. Great retailers aren’t bores. Very few holiday events generate the Wow!
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When I was a bartender in the early 70s and responsible for chalking cleverness on the blackboard behind the bar, on St. Patrick’s Day I always wrote, “Erin, go bra-less.” (Is everyone keeping up?)
There are those of us who dispute the whole idea of specified sainthood, but let’s allow that snake to slither into the ocean along with Patrick’s other urban-legend victims.
I”m a corned-beef, reuben sandwich guy, having been taught how to prepare them properly as a chef during college and after dining at the Carnegie Deli in nyakcitty. I serve them frequently to friends, family, and guests; send home stacks of them in Tupperware containers with guests after we dine (I never get my Tupperware back); and hate having to search for corned briskets in supermarkets near St. Patrick’s day because the nimrods (please look up the word “nimrod”) have already cleaned them out. They take the briskets home and abuse them along with the cabbage they believe is traditional to this particular day of the year. Travesty. (By the way, “corned” comes from the same root word as “salt,” meaning “kernel” or “central.” Thus, corned beef [not “corn beef”] has nothing to do with corn, but everything to do with salt.)
But I digress.
When I was with Kroger, we supported Secretaries Day strongly and invented Sweetest Day so we could sell more fresh florals. There’s nothing new about retailers inventing pseudo-holidays. Presidents’ Day was consolidated for a reason–retail, not convenience. How long until MLK Day is consolidated into another “holiday?” And by the way, what are the appropriate comestibles for supermarkets to promote near MLK Day? Inquiring minds want to know.
Short selling periods are mostly the responsibility of suppliers, not retailers. There’s “guaranteed sell,” “double-supply-calls” during critical periods, and just plain old supermarket muscle. Supermarkets rarely lose during so-called “holidays” on sales of so-called “holiday items.”
As with all holidays, start early. Talk about your strategy with your team and set expectations with suppliers. Get focused on what your customer will need to execute a good experience. Be an event destination. Birthdays, anniversaries, and big games happen every day. There are certain products that are needed for every holiday. Stay fresh and keep the destination items easy to buy.
More and more families and individuals are using holidays that have traditionally been non gift giving to give themselves and others presents. I have observed this with many people I know and believe this is a growing trend. Retailers can leverage these short selling period holidays by minimizing holiday specific merchandising and featuring related everyday items that can be thought of as holiday related; such as green items on St. Patrick’s Day.
Chicago having a fair Irish representation as well, the local Costco had corned beef in the end aisle meat case and Bailey’s stacked high in the liquor aisle. And at 6′ 2″, I still had trouble reaching to the top of the Guinness display to pull down the key ingredient in an “Irish breakfast.” A late night web search of places to celebrate the 17th showed every pub and restaurant with an Irish name from the south side to Milwaukee saying “No Reservations accepted” and “music starting at 10 am.” It will be a sloshing Saturday in Chicago to be sure….
Creating in-store excitement at retail through creative displays and promotions drives sales. So tying in with seasonal events, like St. Patrick’s Day, is a great idea. But is it a big enough event on its own? When I think of St. Patrick’s Day, I think of green beer (and drinking it, of course!), pubs and wearing green (although I would never buy a shamrock t-shirt for the event).
For retailers who have a permanent seasonal display, or if they “greet” shoppers at the front of the store with exciting displays, a spring theme may have a bigger impact. St. Patrick’s can be included in the spring theme, along with Easter, spring cleaning, and even gardening and/or bbq. This gets shoppers excited for spring. Then they make impulse purchases, based on all the ideas you have sparked up through the creative displays.
St. Paddy’s Day is just one more example of the business potential that is frequently under-exploited around key holidays or seasonal events.
The best way to capitalize on this potential is through careful planning and well-managed execution.
See the GMDC study Dan Nelson mentioned for the details on how to do it.
It is not just that people will spend more on St. Patrick’s day this year, there is also a subtle shift in retail consumption seasonality over the last four years or so. A quick analysis of the detrended Retail Sales series produced by the Census Bureau will show that less and less of total retail sales spending is being accounted for by the traditional holiday months (October through January), although these months still account for the bulk of total retail spending on an absolute basis. On the other hand comparing the seasonal index for the months of February through April and June indicates an increase of spending in these months over the last four years. So the learning is probably not that consumers are spending on other holidays, but that spending is actually shifting away from months that were traditionally considered as ‘holiday months’ (all of this is on a detrended basis, which should adjust for wage growth and inflation).
There’s obviously a lot of business to be gotten by merchandising around the key holidays such as St. Patrick’s, Valentine’s Day and Halloween. Here are a few “mirror tests” for retailers who want to capitalize:
1. Am I prepared to buy and distort this category so it makes a visual impact in my store? Will the customer be able to find it?
2. What does my marketing plan look like? Will there be print advertising to support the effort, in-store visuals, or some other tactics? If I’m big enough, do I use broadcast to establish a “headquarters” positioning for holiday goods?
3. Have I done my homework in terms of financial planning? What sort of sellthrough do I need to be profitable before I mark down the goods, do I have enough initial markup to support an exit strategy, and when do I need to aggressively take steps to move the inventory?
The stores that are capitalizing on this growing trend are planning and executing their way to success. There are risks involved in the exit strategy for seasonal goods, but plenty of rewards in terms of incremental volume and traffic.
Hailing from Boston, where St. Paddy’s is a major social event some call “Irish New Year’s,” I can say that indeed there is a lot of money tossed around on March 17. That said, most of it is on eating, drinking, and possibly some party favors. Restaurants and bars can safely promote St. Paddy’s as a fun night out and stock up accordingly. Other retailers can minimize the risk of the short selling season by sticking to the basics and not overdoing it (the Wal-Mart spa kit is borderline). Another questionable example is the St. Paddy’s T-shirts sold at Old Navy. Irish-Americans are concentrated in cold weather spots (Boston, New York, Chicago) where nobody wears a T-shirt till May. It might be a good time for apparel retailers to stock up on the Notre Dame and Boston Celtics sweatshirts, though. Slainte!
GMDC recently released a very extensive study on Seasonal Best Practices which highlights the importance of seasonal and Holiday sales. Several categories experience high double digit growth around peak Holidays, and savvy retailers build a Holiday “destination” in highly visible store locations to ensure their shoppers buy all their Holiday needs at one convenient stop.
The trends clearly indicate that consumers will make strong holiday purchases on specific items in close proximity to key Holidays like Valentine’s Day, Mother’s Day, July 4th, etc. Understanding those category spikes and ensuring shoppers are aware of your one stop location is critical to maximizing success.
The hardest thing about any holiday: figuring out how to be creative. It’s much easier to repeat what you did last year, and that’s boring. Great retailers aren’t bores. Very few holiday events generate the Wow!