Around this time every year, turkeys are roasted, winter coats are removed from the back of the closet, and most stores hoping to lure consumers and increase profits – open early, close late and offer more sale items. Twenty five years ago parents fought traffic, snowstorms, and each other to purchase the newly released Cabbage Patch doll and consumer craze was born. Since then, it’s been commonplace for the nightly news to be filled with images of shoppers waiting in long lines outside of mega stores looking to purchase the new it item.
The term "Black Friday," coined in the late 1960’s, marks the traditional beginning of the period in which retailers turn a profit (i.e. are in the black). Historically, consumer spending increases dramatically during the holiday season. But with the recent economic crisis and bailout, auto industry nightmare, and skyrocketing unemployment rates teamed with stalled wages – will Americans be as apt to shop or will this holiday season be the season to opt out?
Penni Crabtree of the San Diego Union Tribune writes: "This season, holiday sales growth is estimated to be around 2.2 percent, according to the National Retail Federation. Previously, holiday sales grew about 4 percent each year." The online news source Slate.com reports: "Due to all the depressing economic news, more consumers are choosing to play it safe and save what they have. Or as one economist succinctly puts it: "People are scared to death."
In efforts to increase overall shopping, many retailers have slashed prices earlier this year than ever before. Known for their low prices, the often criticized super-chain Wal-Mart has kept posting sales gains in spite of the hard-hit economy.
It also seems that consumers are only buying what they can afford. The National Retail Federation reports:
"Though many consumers are struggling, most will not rely on credit for the bulk of this year’s holiday purchases. The survey found that 41.5 percent of shoppers will primarily use their debit/check card to pay for holiday items this year, compared to 40.1 percent last year. The number of Americans who will pay with cash is also up slightly this year, with 22.8 percent of shoppers using dollar bills to make holiday purchases, compared to 22.1 percent a year ago. People using credit cards as a primary payment method dipped slightly (31.5% this year vs. 32.3% last year), while personal checks are becoming nearly nonexistent (4.3%). "
How has the financial crisis impacted consumer spending this holiday season? What are your plans for holiday spending? Are you planning to be cautious or to shop like you did last year? What do you think other Americans will do – save money or spend it? Will this holiday season help stimulate the economy, as it has in other years? What kind of confidence do you have in the President-elect and his new administration to stabilize the market? What should retailers do to generate shopping buzz and encourage consumer spending? Should George W. Bush don a Santa suit, improve his approval ratings, and bail Americans out of holiday spending?
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