There is ONE day a year every retailer used to wait for with tingling anticipation… but not anymore. The giddy feelings have been replaced with hard dread…
The day after Thanksgiving started out as a professional shopper’s dream, and therefore a retailer’s dream as well. Millions of Americans would camp out in harsh weather. They’d brave lines and boisterous crowds just to capture those door-buster prices on a few items that seem to be sold at less than half price.
The lucky few that made it home with the gadget of the day – that they acquired at a ridiculously low price – were triumphant! And stores were fine selling such items at a loss, because the shoppers would buy lots of other things while they were there.
Then came the Internet….
Then came Cyber Monday, which allowed consumers to shop for longer, from the comfort of their home.
Then came the smart phone and all its apps that allow shoppers to compare prices online to prices in stores.
Finally, we have reached the full-on information mother lode: shoppers can compare door-buster prices with online prices… they can ask for a price match… and they can instantly receive the lowest advertised price… no matter what the source.
The consumer has won. Game over.
All retailers can do now is hope, against all hope, that the sheer volume of sales will carry them through.
Good luck with that…
I know some people that shop on Black Friday. I even know a few who went out on Thanksgiving evening… but the tone was different. There were no more frantic moments of panic because just about every item they wanted (and many they didn’t even know they wanted) was a click away on a smart phone. The shopping itself – the physical trip to the store – was seen as an adventure of sorts, or a way to get out of the house full of relatives!
As for retailers, in-store sales moved up by 3% to 5%, depending on who you ask. Cyber Monday did better, clocking a 20% to 30% gain. But the overall picture was modest.
Retail sales for the period, including the long Thanksgiving shopping smorgasbord, were up only 1.5% over last year. Considering that inflation is running 1.7% to 2%, this is actually a small decline.
THIS is the trend that has sellers worried sick. If the kick-off of what is supposed to be the busiest selling season of the year starts with a modest rise and is marked by laser-like price-comparison shopping, what is in store for the next four weeks? Good question.
Americans are not stupid. They understand that their paychecks are dwindling as costs go higher. They understand that they must fend for themselves in the months and years ahead because there is no safety net they can rely on.
No matter what babbling heads on television say, the median income in the U.S. is lower than it was a decade ago and the costs the older set (healthcare) and the younger set (healthcare and education) bear are moving up at light speed.
Something’s gotta give…
This is what austerity looks like: less income, higher prices. In such an environment it becomes every man for himself.
The internet has become the great equalizer. Now I can compare the prices of a camera at Best Buy in my hometown, J&R in New York and Wal-Mart online, all in an instant.
All of this leads to a bit more money in the pockets of consumers, but it points out the greater issue we face as a national economy. We are dealing with the beginnings of the paradox of thrift, where consumers spend a little less, leading to lower sales for retailers, which leads them to cut prices, then trim inventory and staff. This of course leads to fewer jobs in the midst of a long employment slump, so more consumers have less income and the cycle repeats.
So be wary of the retail sector, especially as we get through the holiday season. Typically this group does well during the holidays, but this year it looks like they just suffered a blow at the hands of very well-informed but poorly-funded consumers.
Ahead of the Curve with Adam O’Dell
I found something interesting on the euro zone when I was looking through some charts today. It has to do with the relationship between the euro zone’s biggest strength, Germany, and its biggest weakness, Spain.