Southwest Retailers Innovate in Weak Holiday Season

Sober-faced food retailers throughout the economically hard-hit Southwest are preparing for softer sales and an uncertain future as they move into the normally busy holiday season, top executives said. Retailers in the region expect a lean and not-so-abundantly green as in dollars spent Thanksgiving and Christmas season in what could be the worst economic times since the aftermath of the Sept.

PHOENIX — Sober-faced food retailers throughout the economically hard-hit Southwest are preparing for softer sales and an uncertain future as they move into the normally busy holiday season, top executives said.

Retailers in the region expect a lean and not-so-abundantly green — as in dollars spent — Thanksgiving and Christmas season in what could be the worst economic times since the aftermath of the Sept. 11 attacks.

Several veteran food executives said they will focus on providing the basics of a holiday meal at a good price, plus pull out a few surprises, with hopes of finding a little more under the Christmas tree at year's end.

“It is going to look like we're in a recession here, and the reason is that we probably will be,” said Lee McPheters, a research professor of economics at Arizona State University who edits the Western Blue Chip Economic Forecast. “There is a gloom over the economy that's not going to go away for at least several months. There's no getting around it.”

In California, Arizona and Nevada, the foreclosure market has whiplashed the economy, forcing a deep housing crisis in what had been fast-growing areas of the country, McPheters explained.

As a result, retailers in the region expect consumers to continue to look for ways to save during the holidays.

“People are not going to quit eating, but there are a lot of ways to reduce your expenditures at the store,” said Al Plamann, president and chief executive officer of Unified Grocers, the Los Angeles-based wholesaler. “There's enough uncertainty out there that I would expect to see a real trend toward cautious buying.”

Plamann said he expects retailers to limit the number of new items introduced on the shelves during the holidays and to not be very aggressive in selling gift items and other general merchandise.

Overall, he said, retailers should see a 2% to 3% drop in sales this holiday season, compared with the same time last year.

In Southern California, Stater Bros. Markets is trotting out a holiday campaign with the slogan “From Our Family To Your Family” in time for the 2008 holidays.

Jack Brown, the company's chairman and chief executive officer, said the 165-store supermarket chain will be offering better buys in light of the economy, although he is tight-lipped about the specifics. The chain has its eye on deals for the white-collar crowd, he said.

“They have been hurt more in this economy than I can remember,” said Brown, whose company backed off from opening three stores this year. “When the market crashed, it really hurt them. They will be looking for values a little harder.”

He predicted that shoppers might cut back on such items as candy, but that the traditional holiday dinners with all the fixings will not be sacrificed, despite the tough economy.

In Texas, Minyard Food Stores got the jump on the holidays like never before with promotions at its 30 Dallas-Forth Worth area stores, starting in early November.

“Normally, we wait for a week before Thanksgiving,” said Bob Highsmith, the retailer's merchandising senior vice president. “We wanted to show the folks who shop with us that our prices are right.”

The company also is counting on a giveaway that's usually reserved for a store opening or other special event. Minyard is giving a car away in a promotion designed to lure customers into the stores during the holidays.

At Pro's Ranch Markets, a Hispanic chain with stores in four states, the plan is to turn up the volume in radio and television advertisements during the holidays with the message of good prices on the basics. That includes masa, the cornmeal dough that is a staple for Hispanic shoppers, especially during the holidays.

“We're trying to turn back the clock as we approach the holidays,” said Mike Provenzano, the company's CEO. “We need to get out there and beat the drum a little bit to help our consumer base during this economy.”

Provenzano also has high hopes for a new gift card to be unveiled for Christmas that is designed to help people better manage their money for grocery shopping.

The Thanksgiving promotions kicked off on Nov. 1 at Sprouts Farmers Markets with a holiday-foods sampling program.

The Phoenix-based company, which specializes in natural foods at its 31 stores in four Southwestern states, also launched a special place on its website to pre-order holiday meals for in-store pickup. In past years, customers could only call an 800 number to pre-order.

“With times being as they are, you have got to work a lot harder than you did before,” said Doug Sanders, Sprouts Farmers Market's president and chief operations executive. “Everyone does.”