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Well, how many ways can you say yuck? Analysts at Wedbush Morgan point out that besides the obvious economic worries, a shift in the 2008 calendar gives retailers five fewer shopping days this year than last (27 compared with 32). They expect this year to be weaker than 2002, which was the lowest holiday sales season in the past decade. Frankly, this could be the worst season in many decades. The government just reported that consumer spending plunged by 1 percent last month, even worse than expected. Now granted, that was October, when the financial markets were in meltdown mode - and when gas was not nearly as cheap as it is today (lower pump prices is one reason cited for the drop in consumer spending). But here's the thing: Spending has become kind of, well, unfashionable. Keeping up with the Jonses these days is more likely to involve installing solar panels than buying the latest model cell phone. More from Wedbush Morgan's Joan Storms and John Garrett:
The concept of "trade down" is evidenced by the relatively better performance, as measured by traffic and comps, at discounters, warehouse clubs, dollar stores, and grocery stores. This behavior should also result in more customer traffic in power centers near the discounters and less traffic at the malls. Retailers have had to respond quickly and are promoting Black Friday much earlier this year ([ Sears Holdings (ticker: SHLD) unit] K-Mart and Wal-Mart Stores (WMT) are just two examples) in order to drive traffic and are very much emphasizing value.
I would imagine Black Friday will be reasonably strong - in part because of all the markdowns on the day after Thanksgiving and also because those crazy early bird discounts have become a national ritual (notice how mall parking lots start emptying out Friday morning). After this weekend, however, it will be a tough slog for many chains. Circuit City, Mervyn's and Linens 'N Things haven't even made it this far - they're all in the process of being liquidated. There’s a lot of talk about other retailers on the edge.
What you're likely to see is retailers pulling out all the stops early; J.C. Penney has 400 Black Friday specials, 20 percent more than in 2007. Toys "R" Us will have 50 percent more door busters than last year. Such front-loading might be explained by a survey showing that 45 percent of consumers plan to shop in the three days immediately following Thanksgiving, up from 36 percent last year. Some won't wait that long: About 80 Gap Inc stores, including Old Navy and Banana Republic stores, will open their doors on Thanksgiving - double last year's number (more details from MarketWatch).
Sales in Southern California should pretty much match that of the nation overall. Despite our image as conspicuous consumers, government numbers show that we’re pretty average when it comes to purchases of apparel and consumer electronics. Yes, wages are higher, but much of that money is plowed into housing and energy.
Mark Lacter created the LA Biz Observed blog in 2006. He posted
until the day before his death on Nov. 13, 2013.