Home for the holidays

This Christmas will see a 5% growth in retail spend - and a focus on unique gifts for the home will try to make the most of it

Normally tight-fisted Canadians are expected to be a little less like Scrooge and a little more like Santa this holiday season. This prediction bodes well for retailers, such as Home Depot, Future Shop and Best Buy, who hope to capitalize on a yearning for home-related merchandise, while others like Zellers and Indigo Books & Music, will stress unique, stylish gifts in their ad campaigns.

The Canadian forecasts are relatively on par with those from the States, where the Washington, D.C.-based National Retail Federation is expecting growth of 5.7% this year. Here in Canada, Ed Strapagiel, SVP of Toronto-based retail analysis firm Kubas Consultants, pegs 2003 holiday spending to beat last year’s by about 5%.

Several other factors are encouraging as well. For one thing, employment figures have been solid – employment rose by an estimated 46,000 jobs in September, according to Statistics Canada, leaving the unemployment rate unchanged at 8% – and consumer confidence is quite high. According to the Ipsos-Reid Canadian Monthly Economic Confidence Monitor, in September 72% of Canadians described the current economy as ‘good,’ up 2% from August.

Added to that, says Strapagiel, a strong loonie will bring down the price of imports, and 0% financing offers from automakers, as well as historically low interest rates, will leave consumers with extra cash. He adds: ‘It won’t be an el cheapo Christmas – people won’t be scraping and saving.’

But the magic question is what will Canadians be looking for? Most observers believe the answer lies in anything for the home – driven by a hot housing market – as well as distinct offerings. ‘It’s about having what’s new, interesting and exciting; people are bored with the same old thing,’ explains John Torella, senior partner at Toronto-based retail consultancy J.C. Williams Group. He blames fierce competition and blurring of retail boundaries as a reason for this malaise; everyone is carrying the same product.

Brampton, Ont.-based Zellers is one retailer looking to beat that complacency by continuing a strategy to assert itself as a place that houses a ‘lot of cool, stylish stuff,’ according to David Strickland, SVP marketing.

‘For Zellers, it’s really critical to give customers something new and different that they can’t get elsewhere. From a holiday perspective, that’s home décor and gifts sourced and built through [the] company,’ he says. ‘[The message is] not about item and price, but [about style].’

There are five spots on tap for Zellers this Yuletide season; one will speak to customer service, while the others will encompass ‘stylish holiday advertising.’ Zellers’ first Christmas commercial called ‘Disgruntled Toy’ broke Oct. 18 – particularly early for the Zellers chain. In this case, the point isn’t to showcase exclusive items per se, but to give moms a head start in scooping up the most wanted items on their kids’ lists, before they disappear from store shelves.

The ad, engineered by the retailer’s Toronto-based AOR Leo Burnett, stars playthings from the toy department at Zellers. My Scene Barbie complains to her peers that she is worth much more than her price tag ($19.96) would suggest. Says Strickland: ‘[The message] is – [we have] hot toys at affordable prices. With three major players in the market, getting out in front is key.’

Similarly, Toronto-based Indigo Books & Music is positioning itself as the go-to retailer for distinct gifts this year, by highlighting items across several product categories in its advertising. According to Sorya Ingrid Gaulin, director of PR and regional marketing, the company ‘searches the world for unique, affordable merchandise.’ She says: ‘In research, we discovered that customers have more than a mercantile relationship with us; there’s a sense of sharing tastes, of us being in the know. They look to us for emerging trends.’

Crafted by Toronto shop Zig, Indigo’s holiday effort launched early this month with print and outdoor, as well as a cinema spot for the first time. Every week, the outdoor advertising, named Chapter One, Chapter Two, and so on, plugs a different gift idea. For instance, one execution shows a piece of chocolate, with a bite taken out of it, and has the tagline ‘Don’t eat the gift.’ Another shows jewelry and quips ‘No keeping gifts for yourself.’

The 30-second cinema ad, meanwhile, which will run in Cineplex Odeon locations across Canada, suggests ‘the perfect gift leaves people speechless.’

Says Gaulin: ‘There’s an emotional aspect. We want to highlight the fact that we make it easy and [pleasant] for the customer.’ Along the lines of making the harried holiday shopping season a smoother one, Indigo will also publish its second holiday gift guide, 100,000 of which will be distributed in stores. Last year, this proved a successful endeavour; in research, Indigo discovered that one-third of its customer base had used the guide to purchase a gift.

For the first time ever, Home Depot Canada, based in Toronto, is also going after the holiday shopper in a major way – and like others, its goal is to make things easier for those looking to fill stockings with unique goodies. While power tools tend to be the home improvement chain’s big seller, it has created $25 gift packs for both kids and gardeners, and there is also a push on stylish, small appliances, according to Pat Wilkinson, the Toronto-based company’s director of marketing.

‘The holidays have been traditionally quieter for retailers like Home Depot, but over the last few years, it has picked up. This is the first year that we’ve focused on being a holiday destination.’

To that end, Home Depot will send out one million copies of its new 16-page gift catalogue in mid-November. Says Wilkinson: ‘We are trying to get consumers to think about Home Depot in a new way – as a gift store.’ Similarly, the firm’s first e-tail site will go live Nov. 5 (see ‘Mixed signals’ below).

But aside from gift giving, Home Depot also recognizes that it can capitalize on the current décor trend by featuring seasonal merchandise in its TV spots. Thus, its holiday theme TV advertising, which also launches mid-month, will highlight home décor, as well as gift giving. For instance, one ad, based on the notion of ‘deck the halls,’ shows a character adding a festive rug to their hallway.

Likewise, electronic retailers Future Shop and Best Buy are also banking on an ongoing focus on the home. According to Lori DeCou, Barnaby, B.C.-based spokesperson for both banners, things look good for holiday, as indicated by a strong back-to-school season. In total, Canadian dollar sales were up 27% across both banners for that period over the previous year, while same-store sales for Future Shop increased 4%.

‘A lot of attention is being given to homes,’ she says. ‘So one of the big [sellers for us] will be around television, largely driven by LCD and plasma screen technologies.’

Other hot items include portable DVDs, digital cameras and notebook computers, driven by increased wireless accessibility to the Internet. These products will be front-and-centre in advertising for both chains; Future Shop’s TV campaign, created by Toronto-based Doner Canada and targeting a male demographic, is wrapped around the line ‘Canada’s high-tech gifts,’ while the Best Buy creative has the tagline ‘Thousands of possibilities. Pick yours.’

But Future Shop and Best Buy recognize that not everyone is tech-savvy – and that a focus on product would mean nothing to these customers. Thus, they have revamped their gift card packaging this year, in an effort to make it more attractive. For instance, the new festive Future Shop gift cards come in little cardboard boxes, while Best Buy cards will be packaged in CD cases. ‘A significant number of shoppers in our stores over the holidays are buying for somebody else, probably male, who wants something specific,’ explains DeCou. ‘They are not necessarily our core shopper, so they don’t know what to get. So we want to help [them], by saying ‘here’s your safe option.”

Mixed signals for Xmas e-spend

It’s still unclear what Christmas holds for online retailers in Canada, although that hasn’t deterred some players from boosting their e-sites.

South of the border, the season looks boisterous – Port Washington, N.Y.-based research firm NPD Group has forecast that online holiday spending will double, as U.S. shoppers are expected to pay US$12.5 billion in total for e-transactions in November and December.

But if 2002 is any indication, the Canadian experience will pale in comparison. According to Toronto-based research company Ipsos-Reid, each domestic e-shopper spent an average of $267 online for gifts last year, totalling an estimated $990 million – a 14% decrease from the estimated $1.1 billion that was spent during the 2001 holiday season.

Having said that, more and more Internet users appear to be shopping on the Web in general. According to Markham, Ont.-based ACNielsen, 41% made an online purchase in 2002 – up from 37% in 2001.

Toronto-based Home Depot, for one, feels the medium is worth investing in. It has unveiled a brand new holiday gift site, featuring 65-odd items. According to president Annette Verschuren, it was simply time to move into cyberspace and offer customers another channel to purchase merchandise.

‘A lot of it has to do with our significant growth [over 400% in the last seven-and-a-half years]. We have most cities in Canada covered and have invested heavily in our bricks-and-mortar business. Now we can [turn our attention to] e-commerce,’ she says.

Similarly, while Indigo Books & Music, also of Toronto, has been operating its Web site for several years, it has also beefed up its online presence for holiday, by introducing a music department in late October, and adding jewelry to the mix. Chaptersindigo.ca will also gift wrap and add personalized messages so that goodies can be mailed directly to loved ones.