The grim outlook for the upcoming holiday season certainly isn’t news to retailers. But Mesirow Financial Chief Economist Diane C. Swonk did manage to find one or two hopeful notes in the Nov. 10 “Nowhere to Hide Special Holiday Edition” of Mesirow’s Themes on the Economy newsletter.
Here are a few highlights and lowlights from Swonk:
- Total retail sales are expected to contract 2.1 percent, driven largely by a sharp decline in vehicle sales. General merchandise and apparel store sales are expected to remain almost unchanged from a year ago.
- Computers may get a slight lift at year-end as small businesses take advantage of the earlier stimulus package, which allowed for an accelerated depreciation rate on capital equipment.
- Sales of large-screen TVs are weak.
- Purchases of gift cards and online spending are expected to abate. Consumers will trade the convenience of gift shopping from their homes for the values to be found at brick and mortar stores offering discounts and (unfortunately) going-out-of-business sales.
- Consumer spending will continue to contract in the fourth quarter. The search for value will intensify. Retailers have already responded, with some offering their traditional Thanksgiving-week discounts a month in advance of Thanksgiving. Other retailers, to stimulate sales, offered discounts tied to the election.
Well, certainly the 2008 holidays will be nothing to celebrate for retailers, but at least we know what is coming. Shoppers will be — out of economic necessity — looking for good prices. Make sure your values are front and center. Then add a healthy dose of amazing customer service. It’s not a bad recipe for what promises to be a sobering season.