Buyer Beware: Holiday 'Must Haves' Could Fly Off Store Shelves

Nov. 19, 2009 — -- The holiday season won't be very merry for Americans hoping to give -- or get -- Amazon's Kindle, Apple's iPod Touch or a top-of-the-line LCD television.

Electronic gadgets are always a big holiday favorite.

But this year, with retailers slashing prices in a tight economy, popular gift-giving items like electronics, video games and TV's are expected to clear store shelves well ahead of Christmas, say retail analysts.

"It's been a very difficult year for retailers and the holiday season isn't expected to be strong," says Nancy Koehn, a professor at Harvard Business School.

Koehn says the harsh sales environment is forcing retailers to slash prices to get buyers in the aisles.

But many big top retailers also are cutting back inventory levels on higher priced items to prevent unplanned markdowns at the end of the season.

"By tightening inventory, stores will be creating demand for popular items, particularly those in a higher price range so you should expect to see a lot of early buzz for popular items in some stores," Koehn says.

Last year, holiday sales were essentially flat and fourth-quarter earnings for many retailers tanked amid a widening U.S. recession.

This year, top stores like Best Buy, Wal-Mart, and Sears are well into "Black Friday" price-cutting mode, and the heavy discounts likely will accelerate by Thanksgiving, when items are likely to be marked down 40 to 50 percent.

(Google Trends has been showing strong public interest in Black Friday sales events since Halloween.)

All of this means shoppers looking to scoop up some of the season's most popular items could find themselves out of luck if they wait until weeks before Christmas to venture into stores.

"There may still be good deals if shoppers wait until late December to shop," says Marshal Cohen, chief industry analyst with NPD Group, a retail consultant firm in Port Washington, N.Y.

"Stores like to create a bit of frenzy on top selling items, but this year they may actually have a real one."

So which products are expected to fly off store shelves this season?

Amazon's Kindle is the clear favorite among many who follow retail trends. The wireless device downloads books, magazines, and newspapers to a high-resolution 6-inch electronic ink display that looks and reads like real paper.

Amazon says the device, which retails for $259.00, can store more than 15,000 books and magazines. And this week, Amazon announced Kindle for personal computers, which allows users to read the 360,000 Kindle books on their laptops or PCs.

Like the Kindle, the iPod Touch is expected to do well this season. Apple boasts that the pocket-sized computer will do almost everything a regular-sized personal computer will do. Users can download movies, music, surf the Web, send e-mail and play video games.

The iPod Touch starts at $199 for an 8 GB model. A 64 GB model costs $399.

Netbooks, the small, portable personal computers, will also be at the top of shopping lists this season. The lightweight, wireless computers allow users to surf the Web and create documents on the go. Retailing for about $200, these devices also are more affordable.

LCD televisions are expected to sell quickly despite a still shaky economy, say experts. Ranging in size from 52 inches to pocket sized, LCD TV screens are already top sellers at places like Best Buy, which have been selling them all year.

Video games have been a hot seller that past few years and this year Activision Blizzard's "Call of Duty: Modern Warfare 2" is already breaking sales records.

It took in a record $550 million worldwide during its first five days on sale. That tops the previous record of just over $500 million set by "Grand Theft Auto IV" last year. The latest in the "Call of Duty" video game franchise went on sale Nov. 10.

Retailers and industry experts say the simplest way to avoid being shut out of the hottest items is to shop early, of course. Going online is one way to do that, but the National Retail Federation reminds shoppers that many retailers will gladly hold in-stock items for consumers via a phone order.

Modifying expectations this season also will be helpful.

"Let's face it; some of these items well certainly be gone well before Thanksgiving," says Jeff Sweenic, a manager at the video game retailer Game Shop in Denver, Colo. He advises shoppers to pivot now and begin thinking of suitable back-up gifts.

"If we sell out of something like "Call of Duty" there are still plenty of other games people will gladly take as a gift."

Retailers Struggle

The struggling economy has meant that this year Black Friday is shifting from a one-day sale event to a month-long stretch of promotions, as retailers work hard or early holiday sales.

Retailers from Wal-Mart to Amazon already have launched ad campaigns boasting of dramatic discounts.

Kohl's annual pre-Christmas flyer went out last week and Wal-Mart is releasing its Christmas catalog early. Meantime, Amazon is set to unleash an ad blitz for holiday sales this week.

Koehn, at Harvard Business School, says retailers want to avoid a repeat of last Christmas when many sliced prices aggressively just before the holidays, hurting sales margins.

"This environment will certainly force retailers to cut prices early," she says. "What remains to be seen is if this strategy will actually work."