Holiday Challenges Continue to Loom, Yet Kmart Adapts the Steidtmann Way

(MoneyWatch)  Not long ago, this blog was a bit critical of Deloitte and its chief economist Carl Steidtmann for a less than definitive holiday sales forecast, yet, it's only fair to note how a statement of his delivered almost a year ago resonates today.

Of course, we now have a more definitive statement about the holidays from the National Retail Federation. On Wednesday, the organization released its 2009 holiday forecast, projecting seasonal retail sales to decline one percent this year to $437.6 billion. The organization's chief economist Rosalind Wells noted that, despite signs recovery had begun to take hold, worries about job security and housing values would suppress spending this holiday season.

The NRF prediction contrasts with Deloitte's for flat holiday sales and that of The Nielsen Co. for slightly, slightly higher but basically flat retail revenues. The scary thing is, though, that NRF predictions usually fall on the optimistic side. Even last year, with recognition broadly taking hold that the economy was on the skids, the organization predicted holiday sales improvements. Of course, the reality was, holiday sales actually declined last year for the first time since formal records of the results were first registered.

Early this year, as the realization was settling in that the economy was in deep decline, Steidtmann made a comment to the NRF convention that retailers would have to step in to provide consumers with credit that stumbling banks were denying.

Now we have the circumstances of Kmart extending a layaway program successfully revived last holiday season to its virtual operation. The newly launched online layaway program allows Kmart consumers to make incremental payments via the web and pick up products in stores when they finish paying. As with the in-store layaway effort, the online initiative has been launched at sister operation Sears as well, but Kmart is taking the lead in promoting the service as part of a National Layaway Week campaign that began Monday and ends tomorrow.

It's easy to criticize observers who are willing to suggest what might developed on the retail scene and really easy to point out when they are wrong or even a bit wobbly in their projections. When they are right, those observers don't always get credit. The development of the layaway option at Kmart and parent company Sears Holding certainly is evidence that, a year ago, Steidtmann was on the money with his comments on tightening consumer credit and what retail would need to do in response.

Certainly, Sears Holding isn't the only retailer that is developing financial services for shoppers. Walmart has been aggressive there as well. As Steidtmann pointed out, even in a recovering economy, battered banks aren't going to suddenly spin the credit spigot back to full stream. So retailers will have to step up if they want their customers to help propel their sales momentum. September sales may suggest that retail is turning a corner on the recession, but the industry has a long way to go before it can fully recover and to do so, it will have to continue exploring means of coaxing consumer cooperation.