What executives expect for the holiday season

There’s just two months until Christmas Eve, and retailers are meeting a more cautious shopper with earlier offerings.

Most retailers won’t report third-quarter results or updated holiday expectations until just before Thanksgiving, largely considered the sector’s most important week of the year. By then, many shoppers will have already started checking off holiday shopping lists.

Amazon’s October Prime Day sales event and competitors’ ever-earlier Black Friday deals grab some portion of the holiday wallet share. The unofficial kickoff to the holiday shopping season comes as executives point to a bifurcation in consumer spending, with lower-income consumers feeling the strain on their budgets, and as a government shutdown and tariff costs threaten purchasing power.

Kohl’s is among the retailers chasing holiday shopping early with hopes to boost the total haul.

“We want to make sure we’re driving that early consideration knowing that they’re shopping early,” Kohl’s Chief Marketing Officer Christie Raymond said at a media event earlier this month.

The off-mall department store is starting its holiday marketing campaign next week, a week earlier than last year when it waited until after the election. In the coming days it will be breaking out the rest of the holiday merchandise not already set out in stores.

A key part of Kohl’s holiday strategy is not only to capture shoppers early, but often.

Raymond said during the last holiday season, between November and January, shoppers made “15 plus trips” on average to stores across the industry, but checked out with smaller baskets. Those findings were was based on a survey that Kohl’s conducted with a third-party research firm.

“[Consumers are] doing the work to get what they want at the price they want to pay,” she said.

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While Academy Sports and Outdoors CEO Steve Lawrence agreed that shoppers are savvy when it comes to price-monitoring, he said he expects customers “to aggregate their spending around those key shopping moments on the calendar where they know they can get the best deals.”

Both Kohl’s and Academy Sports cater largely to a middle-income shopper. Still, Lawrence said consumers are paying close attention to discount events.

“If we run the same promotion this year that we ran last year, there’s higher take rate on it,” he said. “I think that’s a sign customers are really savvy, and they’re figuring out when it’s the right time to shop.”

Lawrence said that while promotions are part of every holiday season’s playbook, Academy Sports will be tweaking how it runs discounts this year in light of higher engagement with the deals.

“If last year we ran a promotion for 10 days, maybe I only run it for 4 days over the Thanksgiving weekend,” he said. “Maybe instead of having a whole brand promoted, maybe it’s only the key categories within that brand, right? Or maybe in some cases, it might be promoting at a slightly lower discount.”

Raymond of Kohl’s said the retailer is seeing shoppers reaching for lower-price options and expects that to continue during the holiday season.

“Customers maybe were purchasing a premium brand, but we are seeing them trading down to private brands,” she said. “We think we’re in actually a great position to capitalize on that.”

A private brand is one made for and sold by only one retailer, allowing for more control over design and importantly, cost. That can mean lower prices for shoppers and higher margins for the retailer than a national brand.

While Kohl’s doesn’t disclose the proportion of its sales that are private label, Chief Merchandising Officer Nick Jones said it’s not as high as it used to be, adding there’s opportunity to boost that share this holiday season, particularly for shoppers trying to stretch their wallets.

About 23% of Academy Sports business is private label, the company has said.

“In a lot of cases, [our private label] is our best expression of value,” Lawrence said. “Our goal is to be at or better than the best price on a given day.”

However, Lawrence said, innovation has to continue to inspire sales.

The retail industry has repeatedly described its customer in recent quarters as “choiceful,” to indicate thoughtful spending, but also “resilient.” Executives continue to use those descriptors — or synonyms — for the upcoming holiday season.

“I think certainly with inflation in certain categories, it’s put some pressure on spending power,” Lawrence said. “But you know, what we’ve also seen is customers are very resilient. They do come out during the key shopping time periods. They came out for Mother’s Day, Father’s Day, Back to School. We expect they’re going to come out again for holiday.”

Dick’s Sporting Goods Executive Chairman Ed Stack told CNBC this week he thought the consumer was “a little bit stressed” this season, but that he’s “cautiously optimistic.”

“If you’re going to provide value to the consumer, and they can see that, feel that value — and I’m not talking about from a price standpoint, could be innovation … then they are going to come and they are going to buy,” Stack said.

Executives for all three retailers agree inventory positions for holiday will be normal, despite tariff uncertainty that many feared would affect order volumes. None of the three were expecting merchandise shortages.

“I don’t think [inventory availability] is going to be any different than it has been in the past,” Stack said. “That really super hot item that everybody wants? That’s probably going to be in short supply, like it is every year.”

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