U.S. retailers have to be excused if they want to promote today’s shopping as another Black Friday sale — as a few have been doing all month long. After all, Black Friday was the one bright spot this season, and today is Friday and a day after a major holiday. What retailer wouldn’t want one last chance to get into the black for the year?
Yet realistically, this year’s bargain-weary shoppers will not be energized enough to rescue a bleak holiday season at retail. In a normal year, a 4 percent increase in retail revenue from the prior year is considered a disappointment; a 2 percent increase is a disaster. The bar this year was set lower, with most retailers planning for about a 2 percent increase. The latest estimates of a 2 to 5 percent decline are still considered a disaster. Many retail analysis didn’t believe a year-over-year decline was possible.
Credit is not as much an issue as it might seem. Many consumers have seen banks reduce their credit limits by more than half this year, yet most aren’t thinking about credit limits when they go shopping today. Instead, the question is, “Is this purchase really necessary?” And when it isn’t, the price reductions have relatively little effect. A sure sign of caution: luxury goods, which were previously thought to be recession-proof, are taking the hardest hit at retail. Sales are down about 25 percent, or about as much as automobiles.
To retailers, though, the most chilling thing they are overhearing today is the line, “I have already finished my Christmas shopping for next year.” If that kind of practical thinking becomes a regular part of shopping, much of the retail sector may be in trouble. Retail was headed for a shakeout even before the recession hit, with hundreds of shopping malls barely limping along, and perennial cash trouble at many of the discount chains. Now some observers are predicting the biggest reshaping of U.S. retail ever during the first half of 2009.