EDITORIAL: Retailers frightened

By | Friday, October 10, 2008

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Boo! The holidays are approaching at a time when consumers are scared. The economy is slow, Congress passed an $850 billion bailout for Wall Street, the banking system is having problems, the housing market has tanked and energy prices are high. Retailers are worried that the holidays could be a bust with consumers. Or maybe retailers are spooked by recent events — for good reason.

The National Retail Federation has predicted that holiday sales this year will only rise 2.2 percent to $470.4 billion. That means the slowest growth since the holiday season of 2002, when the country was still trying to recover from September 11. Back then, President Bush urged Americans to go shopping — spend money, help keep the gross domestic product up and keep money flowing to economically starved businesses. Businesses make 20 percent of their profits during the holiday season, according to retailers. According to a Reuters/Zogby poll from September, 44 percent of Americans said they would definitely spend less this year. Only 7 percent said they would spend more than in 2007. Last year was not a great year for retailers either according to Zogby. TNS Retail Forward predicts only a 1.5 percent growth for the holiday. A Deloitte poll from September also predicted that this could be the worst holiday season in 17 years.

TNS Retail does expect that big chain stores like Target and Wal-mart may survive the dip in consumer cash rather well. These stores expect a 6 percent growth rate as consumers look for better deals. Wal-mart has already taken the lead for the winter holiday by slashing its popular toy prices to $10 - forcing Kay-Bee Toys to lower its prices as well. High-end retailers are taking a hit and allowing more product to be sold at lower prices in department stores this season. In fact, Baccarat, Jimmy Choo and Dolce & Gabbanna have committed to selling more product through the outlet company Value Retail. Luxury retailers do expect things to get better in the spring, according to the Wall Street Journal.

No matter, the Halloween holiday should not suffer as it gives people a mental respite from a grim election year. Seventy-five percent of Americans will still celebrate Halloween, according to a Visa, Inc. survey. And it is by all accounts a cheaper holiday, as most Americans are estimated to spend a modest $47 for their ghoulish giggles and gifts. Parents can easily limit their spending to spoil the little monsters with a few decorations and candy. And if costumes get too expensive, the old standby, a simple ghostly white sheet never goes out of style.

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