Money Matters, Simplified.
For retailers "flat is good" this holiday season
by Jamie Anderson - October 4, 2009 - comments
Given the overall economic scenario and mood of the consumers, the retail industry needs a miracle to have positive year-over-year sales growth during the 2009 holiday season
New York, October 4 -- Dark clouds of recession continue to hover over the retail sector in the United States as customers carry on postponing their purchases. To make matters worse, there is no silver lining in these dark clouds.
Retailers are nonetheless gearing up for the holiday season, which at best, is expected to be flat this year. Flat sales in this holiday season would mean a stop to things getting worse.
A study on spending pattern conducted by Nielsen revealed that 85 percent of households are likely to spend either the same amount or less this year than what they spent last year.
James Russo, vice president for global consumer insights at the Nielsen Company, said of the circumstances that the retail sector finds itself in, “Flat is good.”
No frills, only substance
There is a marked departure in the way retailers are getting ready for the Christmas season. The sellers are not really gung-ho about the season and the usual deck up of the outlets is conspicuous by its absence. The Christmas trees that hung upside-down have vanished.
Retailers have, however, started rolling out promotions and strategies to lure the ever frugal customer. Discounts, freebies and saving cards are all up for grabs.
If the current penny-pinching mood of the customers continues, the biggest beneficiaries would be discount, warehouse clubs and dollar stores. The Internet retailers would also tend to benefit as customers would make fewer trips to the stores and rather shop online.
Mark Vitner, senior economist at Wells Fargo, said of the sentiment, "The ability for consumers to buy is much worse than it was a year ago. It's just not fashionable to spend a lot of money for Christmas, or for anything. It is fashionable to live within your resources.”
Stores reeling under last season’s dismal sales
Many stores are still reeling under the dismal holiday season of last year, which, according to economists, was the weakest since at least 1967.
Data available with the National Retail Federation trade group revealed that the 2008 holiday sales fell 3.4 percent from the year before.
Since holiday sales account for as much 40 percent of annual sales, it could be a do-or-die season for many retailers.
This time around, sales of necessary items as well as at-home entertainment items like consumer electronics, DVDs et al have the best chances of being picked up by the frugal customers.