Retailers optimistic for 2006
By Jane Kitchen -- Kids Today, 1/1/2006
High Point— Kids specialty retailers remain optimistic about what 2006 has in store, according to an exclusive survey conducted by Kids Today. In this, the first in a series of quarterly reports, we'll take a snapshot look at business conditions in the kids retail market, along with the Consumer Confidence Index, conducted monthly by the Conference Board.
Most retailers who participated in our survey — 70% — said they expect business to be up in the first quarter of 2006 — a hopeful sign for the industry.
"We hope to have a good first quarter in 2006 because we have purchased several special offers from manufacturers, allowing us to have some very impressive sales offerings," said a new store owner who just opened in 2004.
Nearly two-thirds of retailers reported a strong third quarter, posting higher sales than in 2004. But sales in the fourth quarter, while still healthy — 57% said they were higher than in 2004 — appear to have tapered off a bit.
Consumer confidence is also on the rise, with November's Consumer Confidence Index finally seeing an uptick after two months of decline.
"A decline of more than 40 cents in gasoline prices this month and the improving job outlook have combined to help restore consumers' confidence," said Lynn Franco, director of the Conference Board Consumer Research Center.
Indeed, many of the retailers contacted for this survey pointed to the negative effect of gas prices on fourth-quarter sales. With prices coming under control, many held out hope that the first quarter of 2006 will improve.
"We're very sensitive to the cost of heating," said one retailer in the Midwest. "Whenever gas spikes, we feel it immediately."
Many retailers are planning more aggressive advertising strategies to boost business in the first quarter of 2006, and broadcast television seems to be the medium of choice. While only 35% of stores reported normally using broadcast television advertising, 60% plan to emphasize it in the first part of 2006.
And while 47% of respondents plan to use direct mail to get their message out — the second biggest category for first-quarter '06 promotions — that's down from the 58% that say they normally use this method.
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