RETAILERS FACE MELTDOWN AS CHRISTMAS NEARS
The economic bloodbath that has impacted all sectors of the American economy hit retailers hard during the last month, just as they were gearing up for the make-or-break Christmas selling season.
Of the 26 retail categories surveyed by America’s Research Group for our Consumer Mind Reader™ survey, only three saw increases over last year’s shopping levels.
Discount stores enjoyed consumer spending levels rising from $195.80 last year to $203.95 in this survey. Consumers also spent more at national department stores and hardware stores.
Categories that were especially hard-hit by the recessionary habits included apparel stores, catalog sales, and toy and jewelry retailers. Even the Internet, which had remained steady and even showed some growth, was not immune to the economic woes. Web shopping levels declined steeply, from $46.22 a year ago to $27.73 in this survey.
All this retail gloom and doom occurred on the eve of the heaviest shopping season of the year. Christmas is often a make-or-break time for the retail industry, and never has that been more true than in 2008. Unless consumers suddenly get into the Christmas spirit and decide to open their wallets, many retailers will not survive. Circuit City filing for bankruptcy may only be the tip of the iceberg. Their failure could have a domino effect on other retailers across the board.
The deep decline in gas prices could be a stimulus for retailing, but that remains to be seen. Consumers must still wrestle with escalating unemployment, tightened credit, and the terrifying prospect of mortgage foreclosures. They feel helpless in dealing with the economic spiral, watching their retirement savings disappear despite the government’s bailout of one industry after another.
The economic forecast for American retailers is as bleak as the winter sky. Next Christmas may see an entirely different retail landscape that the one we are accustomed to today. Those retailers who survive this bloodbath may be few and far between. They will be the ones who slash their prices for cash-strapped consumers, suck up their losses, and continue to market aggressively to maintain their customer base. They will be the ones around to recover their investment when the economy does right itself down the road.
THE ONLY WINNERS
Britt Beemer, founder and chairman of America’s Research Group, is the country’s leading authority on retail buying habits of consumers. ARG tracks consumer buying habits more than any other survey research firm in the nation. The company conducts customized surveys for retail and manufacturing clients across the United States, designed to provide clients valuable marketing recommendations to grow their businesses. . Beemer is author of two best-selling business books, Predatory Marketing and It Takes a Prophet to Make a Profit. His third business book, entitled The Customer Rules, was released in October and is available at bookstores nationwide. More detailed information is available on the America’s Research Group website at www.americasresearchgroup.com