Retailers, Shoppers Battle Unknowns for Christmas 2008

All the modern computer systems and past performance reports in the world cannot prepare retailers or shoppers for what to expect for the 2008 holiday shopping season.

An unusual series of events have combined to create a very uncertain environment on both sides of the cash register.

Shoppers have money. While much has been made of the economic situation with unemployment rising, prices inching upwards, homes being foreclosed upon and retirement plans shrinking the truth is that most have yet to really feel the pinch. Many have pulled money out of the stock market or have cashed in already on their real estate gains.

They just don’t know if they can, or should, spend any of it.

Retailers are watching closely. As the U.S. markets have teetered during August and September consumer spending has slowed to a crawl. The once-dynamic back-to-school selling season was almost non-existent in many areas and retailers have taken that as a clue of what to expect in the months ahead.

Complicating matters are two key events: the U.S. election and the reaction to it; and the date on which Thanksgiving falls this year. With five fewer days between Thanksgiving and Christmas this year compared to the same period a year ago a more compressed selling season means retailers have to be sharp, reactionary and ready for the masses, likely to come at the last minute if they come at all.

With little to do but to stock up and start the sales now, retailers are hoping shoppers plan ahead. Wal Mart tried to jump start holiday sales with a big push to sell toys under a $10 price point starting in early October. But overall economic skiddishness has prevented early measures from being effective.

Looming large over it all is the U.S. election. Experts do not see the election of one candidate over another as being especially helpful in prognosticating the selling season. However, caution abounds as the world awaits the reaction to election results.

Some conjecture is that American businesses are taking positions now for a Democrat administration that has already promised higher corporate taxes. This pre-election positioning has led to much speculation about major retailers who might seek bankruptcy protection before the holidays to stave off extinction during troubled times widely predicted for the next 24 months. Others say that die has been cast as businesses have planned all along for an off-season at the register as most election years typically are.

Others opine that a potential Republican administration bodes well for continued corporate tax benefits and bailouts which would lead to a more aggressive and free wheeling retail environment this Christmas and in seasons to come.

Regardless of where one stands on the issues, candidates and events of these troubled times one thing remains clear in the minds of shoppers and retailers alike: nobody knows for sure what to expect.