December 17, 2008
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News: Wither our Retail Market?
Black Friday – blue Christmas. Which ever means of buying, whether cash, check, debit or credit cards, abundant spending is vanishing. Lack of consumer confidence is showing up everywhere this Christmas season. Nearly half-way through November, 72 percent of our holiday shoppers still had over 90 percent of their shopping left to do. Now we're past the busiest shopping day of the year and wondering where all the shoppers are. It isn't as if retail wasn't expecting it though. The deep discounts that we all expected weren't there either. Retailers realized that volume buying wouldn't be there so they chose the alternative of keeping prices high for the few things they would sell. Credit card expectations are being replaced with layaway plans at brick-and-mortar stores, while online buying is still doing well with credit cards.
For most of us, recalibrating our value system is painful. Before popping out the ole credit cards, 71% of us are asking ourselves "Do I really need this?" and "Is it the best use of my money?" That's something new for us. With the uncertainty of paychecks and credit card availability, we delay longer before buying, are more cost-conscious and are buying less. We have to be more discerning now. Sixty percent of our shoppers are planning to spend less Compared to 2007 when times were starting to get tough. The average number of gifts we expect to buy is 21.5, down from 23 last year. Except for online, more people are turning away from credit cards and are gravitating back to the lay-away days of yore.
Since the brick-and-mortar retail industry largely depends on 40% of their annual revenues coming from this holiday season, they're having to cut back on expenses in anyway they can. One of the hardest-hit categories is the seasonal job market where this will cut back about 31% of their hires. This is not the case with online sales, however, where credit cards are still agreeable because of the inherent savings. These sales are expected to actually increase by 12% over last year to the sum of $44 billion.