O CHRISTMAS TREE, HOW COSTLY ARE YOUR BRANCHES

It's getting a little more expensive to put on a holiday light show in the front yard.

The high price of copper is driving up the cost of some lights by as much as 25%. Rising energy costs means it takes more dollars to keep those lights switched on. Higher fuel prices are also making it more costly to ship items, especially large decorations such as those popular life-size blinking Santas. Artificial Christmas trees and tree stands are more costly, too, as the costs of plastic and steel have risen. The higher costs are leading some retailers to cut corners: Some, for example, are skimping on the number of branches they include in their fake trees.

Big-box retailers -- such as Home Depot Inc. and Wal-Mart Stores Inc. -- have managed to keep prices down. Their high-volume orders can garner discounts, and those retailers also ordered early enough to avoid midyear copper-price increases. But independent retailers and decorating services have been hit hard.

The Christmas Light People, a lighting-design firm based in Tewksbury, Mass., that serves the Northeast, recently increased light prices by 20%-25%, adding close to $100 on a typical job. Holiday Lighting Specialists, a maker of Christmas displays in Tonkawa, Okla., that ships around the country, has seen material costs rise three times since January, forcing the company to raise prices on lights and displays by about 10%. TWI Inc., Wichita, Kan., which runs the lighting-design business LightWorks and the national online retailer LightTheNight.com, has also bumped up prices some 10% on imported products. Bennie Alegria, a holiday decorator in the Orlando, Fla., area whose average job runs about $3,000, says he's seen a 10% increase in shipping costs alone on big light displays, such as a popular life-size Santa in a golf cart. He has passed the increase on to clients this year.

All this comes as electricity rates are rising across the country. A 15% increase went into effect in Baltimore this summer, for example. Utah residents will see a 7.6% increase next week.

The expense of decorating is hitting yards around the country. Each year Tony Blore, a homeowner in Bellingham, Wash., adds another large figure to his home's holiday light show. The show already involves 35,000 lights and garners letters of appreciation from neighborhood families. This year, he eyed an animated Santa climbing a ladder and a nearly four-foot diameter blinking ball by LightTheNight.com. But he opted for only the Santa, which cost around $430.

"The prices are just getting quite expensive," he says. "Maybe next year I'll be able to buy more."

While consumers could just head to the big-box stores to avoid the higher prices, some homeowners say they prefer the work of smaller shops and decorators because of their personal service and because they stock more specialty items. Smaller outlets, for example, may offer commercial-grade light strands -- with thicker wire and more connections -- as well as more durable displays not found elsewhere.

Holiday retailers are the latest companies to feel the impact of high material costs. Soaring metal prices in recent years have affected everything from the cookware to the auto-parts industries. High copper prices -- up nearly 50% in the past year -- have even encouraged thieves to steal air conditioning units and pipes to sell at scrap yards. Indeed, some in the holiday decorating industry say they may try to recoup some of their costs by selling lights to scrap dealers after the holidays and then replacing them next year, rather than going through the effort -- and cost -- of organizing and storing them.

Higher prices of steel in recent years are even causing an uptick in the price of some Christmas tree stands. The Web site of Grinnen's Last Stand, made by a couple in Pennsylvania, reads "Sorry to do this. The cost of the stand has gone up to $40 because of very high steel cost." Two years ago, the stand sold for $35, says creator Jim Grinnen.

The prices of plastics used to make the needles and trunks of artificial trees have also gone up. They jumped last year after hurricanes in the Gulf of Mexico disrupted supply, and have remained higher than in recent years due to the cost of oil needed for their production. Prices of polyvinyl chloride, or PVC, often used in tree trunks, were about 10 cents a pound higher in July than two years prior, according Chemical Data LP, a consulting firm in Houston, Texas. Prices of polyethylene, another plastic that is often used for fake needles, were up 21 cents a pound in July compared with two years ago, the company said.

As a result, some retailers have nudged up prices. Prices of Frontgate artificial trees -- which run from $150 to $1,300 in the catalogue -- are up about 5% since last year. And tree retailer Balsam Hill's products can run as high as $2,300 (for a 12-foot faux Vermont White Spruce with 3,600 lights). Balsam Hill Chief Executive Thomas Harman says light costs contribute to the tree's price, and now constitute as much as 25% of the tree's cost, compared with a high of 15% on trees made earlier in the year.

To keep tree prices down, some retailers are shaving off lights and branches. Web site ChristmasLightsEtc.com this year stocked more affordable options, such as the new Douglas -- a 6.5 foot tall tree with 1,048 branches, or "tips," and 500 lights. It sells for $204. A higher-end tree, the 6.5 feet tall Winchester has 800 lights, 1,435 tips, and retails for $285. Michael Streb, the company's director of sales and marketing, said he wouldn't sell anything with much fewer lights or branches because consumers may end up seeing bare spots.

"You have to hit a price point, but you don't want returns," he said.

Also for the first time this year, the site has implemented a "good, better, best" pricing strategy for lights so consumers can buy more basic products if they are more concerned about price than commercial quality. For example, strands of 50 clear mini lights can go for $3.95, $6 and $7 depending on wire thickness, spacing and how tightly bulbs are fastened. He says the site also tries to keep more in stock, as a way to compete with mass merchandisers who might be more likely to sell out.

But despite any cost increases, many customers still want a professional to dress up their home. Peter Latsey, a real-estate investor outside Boston, spent around $2,000 to have the Christmas Light People put lights on some trees and the roofline of his 5,000 square-foot contemporary colonial home. He didn't mind that the rising cost of lights contributed at least an additional $100 to the job.

"You might mistake this home for an airport," says the 52-year-old father of two. "It's me getting caught up in Christmas."

-- December 08, 2006

By Sara Schaefer Munoz

From The Wall Street Journal Online