Macy’s Promoting Blenders Signals Reluctant Consumer (Update3)

Nov. 23 (Bloomberg) -- Blenders and sweaters may rise in popularity this holiday season as consumers seek to replenish kitchens and wardrobes rather than spend money on luxury gifts.

Macy’s Inc. is promoting oven mitts that are meant to be used as Christmas stockings and can be stuffed with kitchen gadgets. Wal-Mart Stores Inc. had its strongest sales in sleepwear, socks and underwear in the third quarter, the company said this month.

“We’re going to see a gift-giving frame of mind that is more utility focused,” said Stephen Cardino, vice president and fashion director of Macy’s home division, in a telephone interview. “The kitchen’s the heart of the home now.”

After a year of trimming purchases of non-necessities, consumers will be reluctant to break the habit, according to Michael Niemira, chief economist of the International Council of Shopping Centers. Shoppers plan to buy housewares and basic clothes, while reducing spending on perfume and travel-related gifts, according to a survey conducted by the ICSC.

One such customer, Gabby Micelli, said she plans to get her mother shirts and pajamas this holiday.

“It’s something she hasn’t gone out and bought for herself so I’ll buy it for her,” said Micelli, 26, who works for a Los Angeles-based advertising sales firm. She plans to shop at Bloomingdale’s, Nordstrom Inc. and Victoria’s Secret.

Depleted Wardrobes

Among other companies that may benefit from that trend are J.C. Penney Co., the third-largest U.S. department-store chain, and J.Crew Group Inc., because the specialty retailer offers “basics with a twist at a good price,” said Patricia Pao, a New York-based retail consultant.

Heather McAuliffe, a J.Crew spokeswoman, didn’t have an immediate comment.

Kohl’s Corp., the department-store chain, and Zappos.com, the online retailer bought by Seattle-based Amazon.com Inc., may see strong sales in basic clothing items because of their broad assortments and low prices, said Toon van Beeck, an analyst for Los Angeles-based research firm IBISWorld Inc.

“The wardrobe is running thin for new clothes,” he said.

Zappos is in a “great inventory position” to ensure customers will be able to shop through the holidays, Aaron Magness, director of brand marketing and business development, said in an e-mail.

Sales of clothing and accessories may rise 8.8 percent in the holiday-selling season from a year earlier, after an 11 percent drop in 2008, according to Customer Growth Partners LLC, a New Canaan, Connecticut-based retail consulting firm.

Flat-Panel TVs

Electronics such as flat-panel televisions, digital readers and laptops will continue to be popular holiday gifts this year, according to Customer Growth Partners. Retailers will see “exceptional” growth in the number of units sold, but the value of those sales will be hurt by “sharply” falling prices, the consulting firm said.

J.C. Penney, based in Plano, Texas, is promoting entertaining and decorating items this holiday season because more people are expected to celebrate at home, Chairman and Chief Executive Officer Myron Ullman, 62, said on a Nov. 13 conference call.

J.C. Penney fell 22 cents to $29.21 at 4:01 p.m. New York time in New York Stock Exchange composite trading. New York- based J.Crew declined 15 cents to $40.40 and Limited Brands Inc., the Columbus, Ohio-based owner of Victoria’s Secret, dropped 2 cents to $17.23. Cincinnati-based Macy’s, owner of Bloomingdale’s, fell 37 cents to $16.74 and Seattle-based Nordstrom gained 4 cents to $33.99.

Home products, including kitchen items, have been one of the strongest-selling categories for Kohl’s this year, Chief Executive Officer Kevin Mansell, 57, said in a telephone interview.

‘Move to Value’

“It’s to some extent part of this whole move to value,” Mansell said, citing that it’s cheaper to make things at home.

Kohl’s, based in Menomonee Falls, Wisconsin, declined 36 cents to $53.60 at 4 p.m. in New York Stock Exchange composite trading.

Macy’s is selling lots of single-serve coffee makers, including the Keurig model, said Cardino, the home division’s fashion director. Barware and warming-buffet servers are also selling well, highlighting consumers’ focus on entertaining large parties, he said.

Max Boigon, 27, said he’ll buy his mother and grandmother something for the kitchen, like a cutting board, pepper grinder or new knife from a store such as San Francisco-based Williams- Sonoma Inc.

“They love to entertain or cook at home because it’s cost- effective,” said Boigon, who works for a Los Angeles-based sports media company. “And people aren’t traveling as much so they’re doing more holidays in the house.”

Twenty-nine percent of consumers plan to buy housewares as gifts this year, up from 27 percent in 2008, according to the survey conducted by the ICSC and Goldman Sachs Group Inc.

“We’re still living, I think, with the remnants of the last recession and the aftermath of all the problems, so the consumer is still reacting as if the economy is in a recession,” ICSC’s Niemira said. “And that means focusing on lower prices points, home related items and all the basics.”

To contact the reporter on this story: Allison Abell Schwartz in New York at aabell@bloomberg.net.

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net.