Washington Killed Christmas for Retailers (Or So I Like to Say)
From all accounts this was supposed to be a very merry Christmas for retailers, with projections of year over year sales growth ranging between 3 to 4%. Instead, electronics, clothing, jewelry and home goods purchases increased a paltry 0.7% this holiday shopping season compared to last year, according to the MasterCard Advisors SpendingPulse report — the worst performance since 2008 when the Great Recession was in full bloom.
Not that there haven’t been signs of growth: New stats from IBM show that online sales were up 22.4% on Christmas Day compared to last year.
But signs point to a disappointing holiday season when it is all said and done. There are plenty of culprits to blame for this slowdown in shopping, not the least of which are the Newton shootings, which horrified and grieved the nation
Washington‘s refusal to address the fiscal cliff—which it created in the first place one can’t help but observe—is surely playing a role as well. The International Council of Shopping Centers, for example, has been warning of the depressing impact a warring Washington could have on sales. If Washington were to come to a resolution before the holiday, Michael Niemira, the ICSC’s vice president of research and chief economist told reporters last month, it would “propel this season’s performance far above ICSC’s expectations” of a 3% increase in holiday sales.
Survivalists versus Selectionists
Next stop for retailers is the after Christmas sales, but given the deep discounts many feel forced to offer, they are unlikely to add significantly to the bottom line, says Thom Blischok, chief retail strategist from Booz & Co.
And there I would end this post along with some additional commentary on Congress’ idiotic handling of all things economic. Except for this: Blischok also points to a growing bifurcation among holiday shoppers that is a long-term term trend.
“There is definitely a shift in holiday shopping behavior underway, with the ‘have nots’ much more acutely aware of deals and budgets and the ‘haves’ more willing to spend.” This is an old story, of course, but their respective numbers are not. Blischok calls these groups selectionists (the haves) and survivalists (the havenots) and their respective shares of the market pencil in at 34% versus 61%, respectively. There is another 5% that are so wealthy they don’t think about budgets or spending at all, Blischok adds.
In short, going forward retailers that want to reach a majority of shoppers will have to continue to focus on deep discounts and take into account consumers made skittish about every blip in the news. This is not a function of the fiscal cliff, but rather one of the growing income inequalities in this country. But I am sure I can figure out another reason to blame Congress for something this upcoming year. Quite sure