This is a five-day weekend for those of us taking off Friday and Monday in addition to the Tuesday holiday. That adds up to a lot of shopping days, so perhaps it is not such a surprise that retail traffic has fizzled early. I again saw heavy shopping traffic on Friday morning, but what followed was a slow fade. The Saturday before Christmas is often the biggest in-store shopping day of the year, but if that was the case this year it was spread out evenly across the entire day. There were no periods of traffic backups or overflow parking that I heard about. Sunday was slower than Saturday, though what I saw locally could have been affected by a late afternoon television sports event. It is too early in the day to say what Christmas Eve holds for retail, but everyone I am hearing from is either back in the office today or treating today as a holiday. There are no stories of last-minute holiday preparations. There must be plenty of people traveling today too, but I don’t have any anecdotes to verify this.
Adding up the weekend, it is still bigger than a normal two-day weekend, but far short of the shopping frenzy some retailers were counting on. The end-of-season fizzle is probably a death knell for Sears and Kmart and a few other struggling retailers, doubtless including some that looked like they were doing fine.
The shopping season was more troublesome in the U.K., with prominent reports of consumer worries and mid-month layoffs. Consumers and businesses alike are worried about a Brexit recession just months away that may ring in two or three years of hard times nationally and a lost decade in central London.
This month was the first large-scale test for Amazon’s extended delivery network along with similar experiments by other large online retailers, and I wouldn’t say it passed the test. Packages were delivered on time, better than in any of the past four Christmas shopping seasons, but that had more to do with buyers buying early than a well-functioning delivery network. With so many Uber drivers and other near-amateur delivery agents venturing into delivery, there have been more stories of delivery failures this month than ever before. Packages were delivered to the wrong address, then returned to the warehouse to be shipped all over again, creating a week-long delay. Cardboard boxes were tossed at the curb in front of a house or left out in the rain. I did not have a problem with the two packages delivered to my house this month, but everyone I have talked to has heard stories about delivery failures.
The systemic problems in package delivery are not a hopeful sign for Amazon in particular, which is limited in its reach by the lack of a scalable delivery mechanism. Its continuing drone experiments have not drawn much attention this year because they show little indication of helping. A drone delivery costs more than $10, is limited to about a kilogram of cargo, and presents unprecedented security challenges, so it is hard to find a business use case for it. Amazon cannot grow much larger until it it can design a solution for delivering a larger number of packages. This is not a problem that Amazon can solve just by spending more money, because it is trying to create something that has never existed in history.
The biggest takeaway from this year‘s shopping season is the change in consumer mood. Consumers in general are more self-assured and decisive, based especially on what I have seen in the stores. This is not necessarily good news for retailers, because the new consumer is perfectly happy to spend less and get less if that is the simple solution to a problem. From my point of view, though, this is a hopeful sign. If shoppers are less easily manipulated and able to simply go away when stores are treating them abusively, this could be the early sign of a seismic shift in commercial culture. Business that try to sell according to a system and never take the time to look at their customers may fall away, leaving us with a simplified commercial space inhabited by a smaller number of healthier business.
