Thursday, October 20, 2011

A Look Ahead at the Holiday Shopping Season: Reasons to Worry

The major reason to worry this holiday season should be fairly obvious: weak growth and a sharp decline in consumer confidence.  The consumer is facing quite a lot of uncertainty with persistent high unemployment and a sour global economic outlook, and this has caused quite a lot of worry about the upcoming holiday shopping season.

The National Retail Federation is forecasting that retail sales will be up 2.8% from last year, but according to this article in a recent New York Times, ports around the country are seeing significant drops in cargo volumes from their peaks last year.  Retail firms place orders and cargo begins to peak around August and September in ports.  The Port of Long Beach, California is reporting a 14-15% drop in volume.  It should also be noted that rail car loadings are slightly up from last year at this time.

Seattle (photo: Steve Johnson)

A second reason to worry about retail sales is a noticable shift in consumer behavior in the past few years.  Consumers aren't spending as much time in stores, and they are more likely to know what they want to purchase before entering the store.  This makes firms' efforts to entice consumers to make extra or impulse purchases more difficult.

According to a recent survey by the retail research firm, ShopperTrak, consumers are making an average of only three stops on their shopping trips.  That figure is down from five before the recession hit.  ShopperTrak is estimating a decline in foot traffic of 2.2% overall this holiday season.  Much of this decline is being blamed on the internet.  Many consumers are doing research about the products that they intend to purchase online and come to the store with a strong idea of what their purchase will be.  They then purchase that item and leave without browsing.  There is more information on this topic at this article.

Clearly the consumer is more empowered by information on the internet, but the retailer is left reeling unless it can find a new way to return more browsing to the marketplace.  Overall, it looks like another difficult holiday season for retail, and especially so for brick and mortar retail.

Arab Strap - "I Would've Liked Me A Lot Last Night"


  1. I'm clearly no economist and at the risk of sounding like a naive hippy, this kind of doom and gloom about the economy always cheers me up. Finally people are realising that consumerism is a big fat waste of money.. we are spending less frivolously and still surviving. Maybe we will all end up spending more quality time enjoying each other's company this Christmas, rather than opening a hundred unwanted gifts. Maybe we'll even get more creative about gift giving. I'll be glad when retail shrinks back and people become more self sufficient and creative again. I think it will be good for us all in the end.

  2. I feel the same way that Michelle does for myself personally. I think that Christmas and the holidays are a bit overdone. Especially people that go into debt for them.

    At large though, the holidays are critically important just because we group our consumption in an odd way like this. Many cultures practice this one surrounding Christmas, or in China the golden week. It probably distorts the economy and stresses the economy because there is so much investment that is dependent upon consumption that might never come, and resulting inefficiencies could have very bad impacts.

    But personally, I'm definitely in your camp. I want to spend the holidays enjoying the company of my friends and family, their presence is their gift to me!