I have to admit the events of the past week and the pending $700BB bailout are scary stuff indeed. And now, WaMu bank collapses this morning. What is the world coming to?
I was talking to a reporter this morning who is writing about the effects of the bailout/the poor economy on the holiday season for retailers.
Here’s my take (without any preconceptions that I’m a Wall Street analyst):
Holiday was already predicted to be one of the slowest in years, or even decades, with a scant 1 % growth over prior year. Now, I wouldn’t be surprised if several sectors of retail had negative growth over prior year.
The one bright spot in retail continues to be discount chains. As more families buckle down, they’re heading to retailers like Target and Wal-Mart, the 99 cent store, etc. like never before.
THE REAL WORLD RETAILING TAKEAWAY
Necessities rule, extravagances are in trouble.
As evidenced by trade reports, consumers who are already tight on disposable income are only spending what they need to spend on and not much more.
Never before have I seen so many people cut back, no matter what their socioeconomic status.
The housing mess, tight credit, investment and banking failures, higher unemployment…this is the Katrina Hurricane of the economy and then some.
In shopping last weekend, several stores I walked into were doing whatever they could to move merchandise, with tables of 50% and even 70% off merchandise stacked high. Even at those discounts, people weren’t buying. And those retailers reported slower traffic as well.
If you’re in the business of providing necessities and commodities, then you have a chance of being okay. Food, basic clothing, household supplies, etc. are all necessities. Anything else is a “luxury” that consumers can forego in tough economic times.
Are you a luxury or a commodity retailer? If you’re not a necessity, it’s best to figure out how to trim your payroll and your inventory now. And do whatever you can to drive traffic to your store.
How are you making it through?