Blue Christmas

Blame it on the mortgage crisis or on high fuel costs. But consumers are expected to limit their holiday gift-giving this year, and that's going to hurt stores that serve the low- to middle-income brackets.

No wonder retailers are using every promotional tactic in their arsenals.

Take Sears. It joined other chains in kicking off the holiday season early.

On Nov. 4, weeks before the traditional start, Sears launched a lavish campaign based on the theme of wish lists. One promotion, Wishing Hours, encourages people to shop during typically slower shopping periods.

Sears also is alerting e-newsletter subscribers to special values available only on Monday and Tuesday evenings. Shoppers can sign up online to receive the alerts via RSS or widgets.

Ty Pennington, the popular host of ABC's “Extreme Makeover: Home Edition,” announced the campaign via a TV spot last month. Sears sells a line of home products from Pennington. The offer is being promoted on radio as well.

“We want the opportunity to get out there and catch people coming home from work or those who want to shop for special deals from home,” says Don Hamblen, vice president of marketing, planning and program, for Sears Corp.

A Wishing Hours sweepstakesthrough Dec. 11 at www.Sears.com/wishes offers prizes including a Craftsman NASCAR experience, a personal makeover, a backyard barbecue and home improvement or home theater products. Players can watch “Extreme Makeover” on Dec. 23 to see if they've won.

Sears also wants to make shopping easy for busy consumers. “Ready in 5” guarantees five-minute curbside pickup of in-stock items like kitchen appliances and large-screen TVs.

“With all the crowds, some people may elect not to get out in the fray,” Hamblen says. “This gives everyone the opportunity to participate in great deals.”

Finally, for the first time in 14 years, Sears revived its Wish Book catalog, albeit a smaller 188-page version. And the company's circular — delivered to millions of households several times a week during the holiday season — features promotions and other offers.

“Like many retailers, we have to challenge ourselves,” Hamblen says. “We have to look through the consumers' eyes to see how can we provide a better value. They have busy lives and other choices.”

Then there's J.C. Penney. It planned to open its doors on Nov. 23 — “Black Friday” — at 4 a.m., the earliest ever. Early birds could even sign up to receive a wake-up call on their cell phones.

The retailer also mailed a new 72-page “Ultimate Gift Guide” to customers and made it available in stores. And it's reached out through TV, direct mail, e-mail, text messages and viral marketing to persuade consumers that their dreams can come true.

“In a long season you need to talk to consumers more often to get them in more times than just once,” says Tina Manikas, global retail and promotion officer at Draftfcb.

BORDERS

Similar things are happening in niche sectors. For example, Borders Inc. has begun an aggressive campaign extending deep discounts to loyalty members and live parties.

All 500 Borders stores will hold “housewarming parties” on Dec. 6. Food and drinks will be served as local schoolkids sing carols.

Employees will wear Santa caps and reindeer ears.

And the chain will send e-mails to all 22 million Border's Rewards members, advertise in local media and put up in-store posters. Border's tested the idea last holiday season in the New York City area.

More than 50% of the firm's sales transactions come from Rewards members, says chief marketing officer Michael Tam.

Early this month, direct mail pitches were sent to members and prospects featuring discounts up to 30% on any item in the store. The offer had been tested throughout the year and generated “significant” numbers of new customers.

“It's a very aggressive offer to drive new traffic into our stores,” Tam says. “We take nothing for granted.”

Best Buy also staged a party. It sent invitations last month to members of its Reward Zone loyalty program for private evenings at about 150 locations. Attendees were offered discounts and giveaways, double-reward points for purchases and the opportunity to experience home theater and gaming systems.

“Blue shirts (employees) stood at the ready to answer questions,” says Best Buy spokeswoman Lisa Hawk. The company started the program in about five stores several years ago.

“It's about added value,” adds Draftfcb's Manikas. “It's about differentiating your brand as a retailer and as a destination of choice given the sea of values that's out there.”

BAD TIDINGS

But the fact remains that the National Retail Federation expects this holiday season to produce the lowest growth since 2002's 1.3%.

It predicted that sales would rise by 4% to $474.5 billion, falling below the 10-year average of 4.8%.

And there's no sign that things will improve. At deadline, J.C. Penney, Kohl's, Macy's and other retailers cut earnings forecasts both for the holiday season and the year. With that news many store shares tumbled, including those for Penney, Kohl's, Nordstrom and Macy's.

“We think consumers are going to be frugal and cautious,” says Mike Gatti, executive director of the Retail Advertising and Marketing Association. “They're going to play chicken and wait and see if retailers put things on sale.”

Not all the news is bad. Jupiter-Research forecast that U.S. online holiday sales would grow to more than $39 billion, a 20% jump from last year. A record 126 million users are expected to buy on the Internet, a 6% increase over last year. And retailers are trying to exploit that opportunity.

For example, Sears has enhanced its gift-finder capability to identify people by personality type and interests and then key up some relevant offers and bestseller gift ideas. There is additional visibility for consumer product ratings and a “dramatic increase” in the number of products available online.