This holiday season's retail winners and losers

Stores that cater to the wealthy fared the best.

By Jonathan Berr Dec 29, 2011 6:07PM
Image: A family in bed with gifts (© Image Source/Getty Images)'Twas the season when wealthy people unscrewed the vice clamps that had been on their wallets and decided to stimulate the economy. That's great news for retailers that cater to these customers.

Tiffany (TIF), Coach (COH) and Macy's (M) were among the winners this holiday season, according to Jason Asaeda, retail analyst at S&P Capital IQ. He rates Tiffany and Coach as "strong buys" and doesn't cover Macy's, but points out that wealthy consumers are attracted to the exclusive merchandise being sold by department stores.


Americans are spending on Nike (NKE) and Fossil (FOSL) watches, according to Asaeda, who also rates both shares as a "buy." His views are backed up by third party data. A forecast released earlier this year forecast that spending on luxury goods would top $25 billion in 2011. Holiday sales are expected to rise 3.8% to $469.1 billion, according to the National Retail Federation.


For mid-tier retailers such as Sears Holdings (SHLD) and J.C. Penney (JCP), the season was less merry. Sears recently warned of weak holiday sales and announced plans to shutter as many as 120 locations. J.C. Penney has also struggled. In November, same-store sales fell 2%, which was worse than analysts expected. Asaeda rates Sears and J.C. Penney as a "hold."


"It was a tough retail season" for these chains, Asaeda said in an interview. "People were shopping on very tight budgets." 


The Gap (GPS) is also expecting a tough holiday season. Buyers have not been warming up the fashions being sold by the San Francisco chain. "The more fashion that you offer, the better it is for you," said Aseada, who rates The Gap as a "hold." 


Amazon.com's (AMZN) Amazon Prime program, which offers free two-day shipping among other benefits for annual fee of $79, probably drove traffic to the largest e-commerce company. Bringing back layaway will help bolster Wal-Mart's (WMT) returns.


Best Buy (BBY) probably had the worst holiday season of any retailer. The company recently stunned investors by announcing that it wouldn't be able deliver some orders in time for the holidays. The Minnesota company will have difficulty recovering from such a major blunder.


Jonathan Berr does not own shares of any listed company.


25Comments
Dec 30, 2011 1:15PM
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Tiffany....hmmm.  I found Tiffany crystal candle holders at Goodwill not too long ago,  $3.50 for the set. :)    Coach bags are a dime a dozen.  Why be like everyone else??   My only advise is to not get caught up in keeping up with the Jones.  Trust me...we live in a community where the the high school kids drive Lexus and BMWs.  We have two teenage daughters and teach them to be frugal and smart with their money.    Our money was spent at many retail stores this Christmas.  I followed the sales and clearance items.  Our new Christmas tree for next year  was just purchased online for 50% off.  We make plenty of money...but choose to hang on to most of it for rainy days and retirement.

Dec 30, 2011 1:39PM
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i came to live with my grandson a year ago thanksgiving, last year was tough, i lost a lot in my 401 and other investments; but this year our xmas was best ever, no we didn't get rolexes but we had lots of presents for cash, mostly bought online, everyone got what they wanted, but mostly we knew that each gift was measured with a lot of love. happy holidays everyone, thank God, as I do that we are blessed.
Dec 30, 2011 3:53PM
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I think the big price difference between Amazon and Best Buy is finally outweighing people's need for instant gratification.   Until Best Buy opens their eyes to the fact that they can't keep charging outlandish prices on things that you can buy for 50% less at other places, they will continue to go downhill in sales.
Dec 30, 2011 4:20PM
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Uhhhh middle class, used to be that. Now I am living day to day but what the heck we had a nice holiday anyway. My kids used to be able to count on me when they needed something but not now. House price plummetted,401k's gone,job also gone,health pretty much gone but what the heck i still got my smile!Smile
Dec 30, 2011 1:07PM
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I'm barely middle class, living on my husband's income while in school full time.  We have three kids.  For the last few Christmases we have kept the same budget.  $300 per kid.  I know its a lot for some, not a lot for others, but we saved all year to scrape together the $900 so we would have it for them. We bought "luxury" gifts for our kids.  Each got one present- a $300 present.  A poll like this would indicate wealthy buyers buying luxury.  The reality is we are not wealthy but went for quality over quantity.  Most people, I think, these days would rather buy one "nice" thing instead of the volume.
Dec 30, 2011 1:12PM
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we didn't spend nearly what we usually would, partly because the kids are, for the first year, all out of the house. we did both, internet orders and stand alone brick and mortar and we are more than satisfied with both the service, quality and prices. we used to consider ourselves middle class but no longer, that's another reason we spent way less than we usually would, and unlike one post I saw, we paid cash, another reason we spent less as there was much less on hand, but we did not want to increase our debt, since I PERSONALLY LOST ABOUT 40,000 OUT OF MY 401K AND THE HOUSE IS DEPRECIATED BY MORE THAN 100,000 AND STILL GOING DOWN AS FAR AS WE CAN TELL. my wife is working part time and thank goodness is able to make up part in un-employment, and I had to take my disability as I can no longer do what I did for 40 years 
Dec 30, 2011 4:18PM
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Purchased my electronics through Amazon.  I also purchased alot of stuff by going to local craft fairs and bazaars.  I like the idea of supporting the local business guy.  Whenever possible, I'd rather spend a little more and keep the money here than spend it on made from China and Indnesia products,.BUY LOCAL!!!!
Dec 30, 2011 4:35PM
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I could not afford to shop this year, so I found a book on Origami and made friends and family different pieces from the book (out of new paper of course) and gave them away. They were a big hit and I think my friends understood that this is the true meaning of giving during this season. One does not always have to shop the big name stores to enjoy a good holiday. But that is just me, and we live in a need-it-now, m****duced society now...So who knows? I hope they really liked my giftsSmile
Dec 30, 2011 12:55PM
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Agree with Pricelister.  Walmart and Best Buy - the shopping experience is CHAOTIC and usually not worth the time to buy the same item online at Amazon or another smaller retailer.  Bought tons of stuff at Amazon with the free 2-day shipping (student) throughout Oct Nov and Dec.  Several hundred dollars went to Amazon, JC Penney (again the one solo store NOT attached to the shopping mall), and Macy's....but all mostly online.  I also start shopping wayyyy early.... like in July/Aug timeframe. I shop earlier so we can afford more...I don't wait until to December to buy gifts. I mean, it comes the same time every year. I buy here and there throughout the year on sale in this economy not wait last minute. Fossil and Nike are not "upscale" - i bought gym shoes for 40 bucks at Nike in Dec, and a watch for 60 at Fossil on black friday..... NOT high price in my opinion.

Dec 30, 2011 3:41PM
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In general I think clothing took a back seat to electronics. People are nuts for electronics. I guess they can get the clothing they want after Christmas when its drastically marked down.
Dec 30, 2011 1:01PM
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I guess of what is called "upscale" I wouldn't put Fossil watch as that, but Rolex obviously (with the cheapest watches around $8000). There was no doubt more spending this year esp. with electronics & clothes of what I seen. Aeropostale & Old Navy(Gap) being the two winners this season. HH Gregg what I seen were mostly sold out on the big screen TV's with all the latest techno features: 3D, internet capable, Smart TV etc. (a somewhat upscale buy, but prices are very competitive & low right now). People are looking for the bargains still this year, but it is interesting that the lower to mid level stores (except maybe the Five Below or Dollar Stores IMO) did take a hit like Sears, Kmart, JCPenny, Wal-Mart etc. People want quality for a good price, and that's what was hot this year - even for a little more outlay. To all have a Happy & Healthy New Year!

Dec 30, 2011 11:52AM
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Me:  Upper middle class family man in suburban Chicago.  I observed many squarely middle class shoppers buying bargains at Macy's.  The newer, non-mall  JC Penney in my middle class neighborhood was rocking all month...many,many  spanish-speaking customers...whatever that indicates.  Sears -  Don't go there unless I need tools.   Best Buy -  Chaotic environment, overpriced merchandise...I go in there once a year and remember why I spend ZERO there.  The Nordstrom I visited was busy  and I bought there...merchandise and service justify the price.  WalMart - Pharmacy only.   Bought a Fossil watch as a gift...under $100 is not what I'd call an upscale watch.  Gap - Has "normal" clothes and good holiday sales...spent hundreds there for the wife and kids.

Dec 30, 2011 12:16PM
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Actually most  families spent little real cash this season, they merely added to their accumulated  consumer credit card debt. It's only a matter of time before this "borrow economy" house of (credit)cards meets the fate of the housing market. 
Dec 30, 2011 4:22PM
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Scullyrn, I hope things get better for you and that 2012 brings you a prosperous and healthy year!
Dec 30, 2011 5:17PM
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Best Buy very disappointed in the amount of products to purchase this year..They were out of every thing I needed. Wouldn't hold anything for even an hour while I went to ATM.  Went to purchase 2 Toshiba Thrives only could get one. So went online to Amazon and bough from them. You can't beat the shipping everything comes right away and no problems returning through them. I purchased most of my Holiday gifts from Amazon.
Dec 30, 2011 5:23PM
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I certainly missed Borders Bookstore.  Their staff was always in the holiday spirit and had such great recommendations.  Other places, it was just another day.
Dec 30, 2011 4:12PM
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AMAZON Rocks!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Dec 30, 2011 5:10PM
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@ sooners rule

what if that lady already knew it was a wild goose chase, that your item didnt exist.  what if she just wanted to get paid for sitting on the phone and interrupting other employees around the company.  any wonder that company is down sales?

but then i guess you wouldnt think she was some kind of hero for acting like your personal assistant.  wonder how many other customers will never shop at that store because the employee was tied up with you instead of helping them with a simple problem.

stores find that customer service is overrated.  if its on the shelf, its for sale.  if its not, deal with it.  plenty of people that can manage to find what they need without intensive assistance, no need to throw all their resources at a couple people with super-high expectations.  especially if they are not upscale and expensive in the first place.

some customers are just not worth dealing with.  you sound like one of them.

Dec 30, 2011 5:31PM
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I guess I was one of the lucky ones. Placed an order for the $149 netbook on Thanksgiving morning at 7AM an actually received it instead of a cancellation notice.
Dec 31, 2011 3:25PM
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Our Christmas money went to paying bills and helping our extended families who had hit hard times have electricity and heat. It was not a merry Christmas here. With the economy hurting in my husband's industry (construction) and me now a disabled amputee, we are without insurance, etc. However, I am not living in a cave and do need to buy things that are necessary.
As to some of the companies mentioned above, I feel Best Buy also blundered with its TV ad campaign. The negative qualities projected in their Greedy Woman shopping and harrassing Santa, cast an unpleasant impression of THEM. Add that to their cancelled and out of stock Xmas orders, they really were the epitamy of Corporate Greed themselves.
Macy's consistently keeps up appearances with pleasant service, solid products and prices that appeal to most all classes. JCP and SEARS still seem to have never crawled out of their 1960s/1970s middle class family BLAHS. No matter what they try, they never seem to pull off looking Modern. I want them to survive, but unless they get better AD Companies, they are just going to continue to fade away.
NIKE, to me, is just over-priced trash that rides on celebrity names and cheap labor. The rioting over the new Jordan's is another example to me of their failure and it is sad that folks still give them credence at all.
Amazon still continues to maintain HOW to do it right! Walmart always seems to have that one thing you cannot find anywhere else, LOL. The GAP is like JCP and Sears and is falling into a rut. Their shops are great big empties and boring - 1984 was fiction, not a clothing store!
I ramble on with my opinions and observations. However, those stores that are failing need to take a clue from those that succeed - Good ADS, consistent service, listening to their consumers and finally, adapt or die. Darwin was right.


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