After the disastrous Christmas shopping season of 2008, it’s understandable that retailers desire 2009 to be a makeup year. They’re hoping that pent-up demand for “must have” electronic items and less pricey gifts catering to those desiring creature comforts like sweaters and other clothing items will place their bottom line squarely in the black this year – after all, Black Friday comes with the hope that subsequent holiday sales will make the year’s profit.
But even with the huge crowds swarming around stores in the predawn hours of Black Friday, retailers only saw a modest gain in overall sales. It could portend yet another lousy Christmas shopping season, particularly if the items drawing interest only did so because of heavy discounts placed on loss leaders.
Observers, though, always seem to be shocked by making the yearly realization that shoppers are waiting for a bargain. Even in the best of times there are price-conscious consumers, so it’s hardly a stretch to believe this year will not be a seller’s market.
One thing holding shoppers back from profligate spending is the new idea that cash is king. Not only are consumers holding out for the best bargains, the wait-and-see approach also comes from the realization that their next paycheck may well be their last. As private employers have reduced hours and slashed staff, even the employees of state and local governments once practically immune from job cuts face unpaid furlough days reducing their incomes too.
On the other side of the frugality equation is a preemptive strike by credit card companies to increase interest rates and reduce credit lines in the face of new government regulations affecting their industry. With many homeowners now unable to support their spending habit through home equity lines of credit because of sagging home values due to a glut of real estate on the market, they have little choice but to cut back on their giving and use their assets on hand rather than borrow in order to purchase gifts for their entire list.
There’s no question that Americans are being taught a useful lesson in living within their means this Christmas – in fact, this may be the year homemade gifts make a comeback. Unfortunately, the house of cards our consumer spending-driven economy became is still tumbling down and government policies aren’t conducive to turn it into an economy driven by savings and investment, at least not in the short term.
With unemployment at a rate unseen in a quarter-century and Americans feeling the pinch of having their savings and assets wiped out by the downturn in the financial and housing markets, the prospects of a profitable green Christmas for retailers aren’t very good. Retailers who are invested in the mantra of “shop until you drop” may themselves end up dropping like flies like former electronics retailer Circuit City did last year. In turn that vicious cycle throws more people out of work and forces them to drain their assets in order to survive.
Millions of Americans can consider the last year a lost year insofar as saving for their future goes and a lot of people are back to square one financially, having lost everything they owned in a tide of mounting debt. Since they can’t print money like the federal government can to mask its deficit spending, making up their financial losses will take several years of frugality by Americans, and retailers may dread the prospect of getting several more lumps of coal in their stockings as Christmas shoppers try to recover over the next decade.
Michael Swartz is a Liberty Features Syndicated writer.
Written in the wake of Black Friday, this piece cleared LFS just last Monday.
