As holiday shopping begins this month, local businesses are expecting an increase in profits, but possibly not as much of an increase as in 2006 because shoppers are facing extra challenges.

Climbing gasoline prices coupled with higher energy costs and interest rates have taxed some discretionary spending in most budgets, officials say. A higher percentage of foreclosures, dropping home sales and a tightening of credit availability have added more possible strains to seasonal shopping.

But economists say they still expect an increase in holiday sales, albeit smaller than last year.

“There are so many factors to consider,” said Matt Ludemann, manager of the Golden Triangle Mall at Interstate 35E and Loop 288 in Denton. “I think holiday sales will be strong, but I don’t think we’ll see the same increase as we’ve seen in past years with the increased fuel prices, uncertainty with the stock market, the credit crunch and the foreclosures.”

Ludemann’s concerns echo the national economic retail forecasts from the International Council of Shopping Centers and the National Retail Foundation.

Michael P. Niemira, chief economist and director of research for the International Council of Shopping Centers, said the continuing weakness in the housing and mortgage markets has reduced the consumer’s willingness and ability to spend this year. However, consumer income has strengthened, he said, and consumer confidence is more neutral than negative.

Nationally, surveys show retailers are expecting between a 2.5 to 4 percent increase in holiday sales this year, with the average shopper spending between almost $800 to just more than $900.

According to the National Retail Foundation’s 2007 Holiday Consumer Intentions and Actions Survey, conducted by BIGresearch, U.S. consumers will spend an average of $816.69 on holiday-related shopping and spend an additional $106.67 on special “non-gift” purchases during seasonal promotions and discounts offered by retailers. The total of $923.36 indicates an estimated 3.7 percent increase over 2006, according to the news release.

The survey indicated shoppers will be more conservative with spending because of current economic conditions. Those same economic conditions are expected to generate a lot of promotional and bargain offerings by retailers, which could lure an estimated 40 percent of shoppers to start their holiday purchases early this year, according to the survey.

Season begins early, lasts longer

Some area retailers were stocking holiday items months in advance. Others decorated their stores in early October — a sign that some shoppers were likely to get started before Halloween.

“I think there are already people shopping for holiday gifts,” Ludemann said.

Locally, retailers are already talking about promotions and extending shopping hours to lure more consumers into the spirit of giving.

At Hastings Books, Music and Video on Colorado Boulevard, hours will be extended to include Thanksgiving Day — a first for the Denton chain.

Retailers around Denton’s downtown Square also hope to launch the season early with a holiday open house before Thanksgiving.

“A lot of people are excited about the Christmas season and shopping on the Square,” said Kathy Warren, owner of Rhinestones Boutique on Oak Street.

Cynda Bouse, who owns Wildhorse Crossing on Elm Street, said she also is planning November specials to “entice customers in.”

The weather, though cooler, is not yet cool enough to spur people into thinking about holiday shopping, she said.

“Usually, I have more people interested in Christmas by now, but it’s still so hot outside,” Bouse said.

Cheryl McKnight, owner of Cheryl’s Cottage in Hickory Creek, said that while business has been down overall throughout the year, she’s gearing up for a busy holiday season.

“I have holiday orders coming in steadily,” McKnight said. “I’m ready and anticipating.”

A number of store owners around the Square also plan to participate in a holiday home tour at Robson Ranch on Dec. 2, during which they will set up booths to show their wares.

“It’s looking to me like people are looking forward to Christmas,” Warren said. “We’re thinking it’s going to be a great season.”

Another factor in holiday sales that has become more prolific in recent years is the popularity of gift cards, industry officials say.

Gift cards are expected to extend the holiday shopping season into 2008, according to Niemira. An estimated 30 to 40 percent of those receiving gift cards are expected to redeem them in the week after Christmas and into January.

Recall concerns

Some in the toy industry are expecting fallout from the recent recalls of toys possibly containing lead.

“Regarding toys and recalls from China, people are going to shy away from those extra couple of toys they bought in the past for their kids,” Ludemann said.

At Toys Town in the Golden Triangle Mall, owner Dhiraj Karki has kept an eye out for the recall lists, removing any items in question from shelves.

But, despite recall concerns, there are plenty of toys left for youngsters to safely enjoy, he said earlier this year.

Loop 288 construction

Traffic congestion on Loop 288, which is going through expansion construction for a second holiday season this year, is not as much of a concern among some local business owners.

“I don’t think the traffic situation is going affect our business,” said Doug Finley, manager of the SuperTarget at Loop 288 and Brinker Road. “It didn’t really affect us last year.”

Though Circuit City is new to Denton after opening in October, store manager Bob Kirby said the traffic problems have been planned for.

“Sure, the traffic problems affect the customer,” he said. “It makes it tough, but you have to take care of your customer.”

The key, he said, is to make the shopping experience worth struggling through traffic tie-ups.

“We’re the new kids on the block, and we expected and budgeted for it,” he said. “But you have to make sure when people come in that you make it worth the wait.”

This story also appears in the November issue of the Denton Business Chronicle.

STAFF WRITERS Randena Hustrand and Shae Martinez contributed to this report.

DAWN COBB can be reached at 940-566-6879. Her e-mail address is dcobb@dentonrc.com.