Tapping Into Shoppers' Psyches

Battered Retailers Turning to Sentimental Sales Pitches

This holiday season, it's hard to tell who is more terrified: retailers or their customers.

The economic downturn is rattling U.S. shoppers as their wallets shrink and credit dries up. Retailers, who just reported their worst October in decades, fear disaster. The battle for customers -- and survival -- is on, and stores have little margin for error. With Wal-Mart dominating the race to rock-bottom prices, those who can't compete must get creative.

"Believe," says Macy's.

The storied department store chain is betting that what shoppers want most during these turbulent times is hope. And it is relying on Virginia, the 8-year-old girl who wrote to the New York Sun in 1897 to find out whether Santa Claus really existed, to embody it.

The response to her letter -- "he exists as certainly as love and generosity and devotion exist" -- was reprinted in about 300 newspaper ads Sunday, and Macy's celebrity designers Martha Stewart and Jessica Simpson will recite the paean to beauty, joy and faith in TV spots. Stores will be outfitted with desks and mailboxes where children can scrawl their letters to Santa. "Believe" has become the company's holiday campaign motto.

Peter Sachse, president of Macy's Corporate Marketing, said executives began brainstorming the idea shortly after Christmas last year: Believe in Santa, believe in goodness, believe your 401(k) will one day bounce back. Believe in Macy's. Sachse said the theme felt even more relevant as the economy began to falter.

"It is this stable thing out there in this maelstrom that is going on around the consumer," he said. "I think it's going to strike a chord in America."

Surely, the thinking goes, some shoppers must need relief from wallowing in their economic misery. Women's clothing chain Talbots is hoping they'll want to escape to private parties at its stores.

At these "hostess events," a loyal customer throws the party, and the store shuts down to the public. The company provides hors d'oeuvres, drinks and, in some cases, even a stylist to help women update their looks. All the hostess has to do is bring her friends and their charge cards. Apparently, they are.

"I anticipated them being good," Talbots Chief Marketing Officer Lori Wagner said of the parties. "I never anticipated them being a religion."

About 70 parties have been held so far, with 60 to 200 shoppers at each event, she said. Talbots is expected to roll them out to all its stores by the first week of December. The parties are supposed to build relationships between shoppers and employees, which the retailer hopes will translate into higher sales, she said. Talbot's holiday line was designed around the concept of the perfect hostess, inspired by the chain's socialite founder, Nancy Talbot. It's even emphasizing "hostess gifts" such as small leather goods and sweaters for the first time this year, Wagner said.

But it remains to be seen whether warm and fuzzy feelings translate into bottom-line growth during a year of financial crisis. Darrell Rigby, a partner at consulting firm Bain & Co., said many shoppers are on tight budgets this year and may not be swayed by their psyches.