Holiday decoration costs can help retailers

For the holiday season, the front lawn of the Milam family’s home in Dallas has been transformed into a mini golf winter wonderland.

Visitors stop to admire the Christmas decorations almost from sunrise to sunset — and borrow a club to play themed rounds of putt-putt around Santa, candy canes, snowflakes and more.

“Not only do you see the excitement and wonder of the kids, you see the adults as well,” said Mike Milam, a firefighter and father of two.

Since the Covid pandemic, decorating the front yard has become an annual tradition for the Milam family. The extensive decor family of four captures a trend that many retailers are including Home Depot And WalmartTried to capitalize in recent years: Some consumers are getting big on seasonal decor, even as they watch how much they spend on other discretionary items.

Consumers are prioritizing decorations and experiences over gifts this holiday season, according to consulting firm Deloitte’s annual holiday spending survey. The survey found that respondents expected to spend a little less on gifts this year – down about 3% year-on-year. But they planned to spend about 9% more on nongift purchases, most of which came from holiday decorations.

Survey respondents said they plan to spend $181 on home-related items, furnishings and holiday decorations, up 22% year-over-year and nearly 60% more than the pre-pandemic 2019 holiday season.

Holiday decorations are providing a boost for retailers, even those who prefer the target, Dollar General And dollar treewhich has seen a pullback in other segments

Target’s chief commercial officer Rick Gomez said on an earnings call in late November that customers are “looking for ways to add a little seasonal decor,” which has led to higher sales of accessories including frames, candles and vases in recent quarters.

Dollar General CEO Todd Vassos said on the company’s earnings call in early December that the retailer was pleased with customer response to the “discretionary aspect of Halloween.” He said shoppers’ response to those seasonal decorations offers “some glimmers of hope” as the dollar store chain heads into the peak of the holiday season.

Yet holiday decor sales may not look as glamorous as some companies would like.

For example, National Tree Company CEO Chris Butler said sales have slowed over the past two years. He said the New Jersey-based company, which sells online through retailers including Kohl’s, Amazon, Macy’s and Home Depot, expects year-over-year sales to be flat.

About 70% of the company’s sales typically come from artificial Christmas trees, but it also sells decorations such as wreaths and garlands, Butler said.

Butler said sales picked up in 2020 and 2021 during the pandemic, when consumers had extra stimulus money to spend and more time at home. Since then, 2022 and 2023 are “down years because we’re getting past that big boom,” he added.

Based on the company’s research, customers typically get a new artificial tree every five to six years. Pandemic purchasing patterns and inflation stressing households have lengthened that replacement period, he said.

“If you can try to keep that tree for another year, customers are probably going to do that instead of buying a new tree,” Butler said.

Home Depot, a longtime seller of both real and artificial Christmas trees, is leaning more toward seasonal decorations — especially after its 12-foot skeleton, Scally, became a viral sensation during the pandemic. It is selling an eight-foot Santa and an eight-and-a-half-foot reindeer this year, along with a wide range of other decorations such as animatronic Disney characters.

Yet the home improvement retailer has struck a balance to attract consumers looking to spend less on holiday cheer after high inflation, said Lance Allen, senior merchandiser for holiday decorations for the home improvement retailer. He said it bought more low-cost artificial Christmas trees this holiday season than in the past, such as a prelit tree that sells for $49.

He adds its “porch greeters” — plastic figurines like a little snowman or a golden doodle in a Santa hat — are also a more wallet-friendly pick under $40.

Target’s leaders have also emphasized value, as they try to win over consumers who are more discerning about spending on wants than on needs. The big-box retailer is also tapping into trends, such as pink Christmas decorations, small figurines for mantel landscapes, oversized bows for entryways and walls and nostalgic ceramic ornaments, spokeswoman Brian Harper-Tibaldo said.

And to drive sales, Walmart has followed social media-fueled trends while trying to offer value. It debuted a six-foot-tall white nutcracker after it noticed customers were buying its painted large nuts and redecorating them.

Nuts sold out when they first went on sale last year, said Sheila Wiles, Walmart’s head merchandiser for holiday decorations.

Low-cost decorations have also been a hit, he said, with customers making their own garlands from $1.98 red velvet bows and decorating their Christmas trees with 98 percent artificial snow instead of ornaments.

Home Depot, Target and Walmart declined to share sales figures for holiday decorations this season, or say whether the category is performing better than last year.

Although the Milam family created a holiday scene, it wanted to find value along the way.

Instead of buying a lot of decorations, the Milam family made most of it. The family spent about $1,000 landscaping its front yard to create the mini golf course, Mike Milam said. Most of the supplies came from Home Depot, where he bought lumber, paint and other tools. Family of four—Mike; his wife Katie; 12-year-old daughter Merrick; and 10-year-old son Nash – spent nights and weekends building putt-putt holes together since early fall.

This year, the family bought an eight-foot real Christmas tree from Home Depot for $129 and a festive, plastic Christmas chicken for $20 on Amazon.

But most of Milam’s decor is recycled from last year, Mike Milam said. In his neighborhood, he said, most families have decorated and flowered their backyards just like last year.

Mike Milam said he was “more conscientious” about his spending this year. Food and electricity prices are higher than before. Also, as her kids get older, they have more sports activities that come with a price tag.

“Everything costs a little more,” he said.

Despite the decorating costs, she plans to continue decorating her property — and has plenty of other ideas in mind for the front yard. So far, the family has filled the front yard with themes including Nintendo’s Super Mario and a Christmas spin on Steven Spielberg’s classic movie “It’s the Extra-Terrestrial.”

As she spent more money and time on holiday decorations, she cut back on gifts for her kids.

“I’d rather experience than stuff,” he said.

Through the projects, she said her children have become more skilled by learning how to paint, make astroturf and use an electric saw. It has become a way for the whole family to get creative and bond.

“We probably have 12 to 15 years worth of ideas,” he said. “As long as I work and my kids are around and want to be a part of it, I’ll do it.”