A Blue, Blue Christmas for Retailers - Holiday Central

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ABOUT THIS BLOG

It's a make-it or break it time for retailers. The holiday selling season is always a critical time for retailers, but this year this may be even more true. With several retailers already falling victim to a drop in consumer spending, and filing for bankruptcy, retailers will be navigating through some tricky waters. Consumers are strapped for cash due to high energy and food prices, and unemployment is rising. The recent credit crunch has made it more challenging for retailers and consumers to borrow.

This blog will look at the winners and losers in the retail space. Who has the right strategy to capture consumer dollars? It also will look for trends in consumer spending and how that will impact the economy.

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Oct.15

11:24 AM ET

Wednesday, 15 Oct 2008

A Blue, Blue Christmas for Retailers

Posted By:Cindy Perman

Topics:Consumers | Retail Sales

Sectors:Personal and Household Goods | Retail

Retailers may be dreaming of a green Christmas — as in, lots of greenbacks in the register — but at this rate, it's going to be a blue, blue Christmas.

Target store
George Widman / AP

The government released its September retail-sales numbers this morning and the numbers weren't pretty: Retail sales tumbled 1.2 percent last month, the biggest decline in three years. It's no secret that auto sales have been weak but even excluding autos, retail sales were down 0.6 percent, double of what was expected.

"People have dropped shopping," Joel Naroff of Naroff Economic Advisors wrote in a note to clients. "This happened even before the total meltdown in the stock markets. What is ominous is that the declines in spending were broad based."

Indeed, demand was down across the board: Cars, clothes, appliances, furniture, food, sporting goods, electronics and restaurants. Even online spending, the workhorse of the retail world, was down, Naroff noted.

And here's the worst part: It's expected to get worse as we get closer to Christmas.

"I think the consumer has actually finally hit the wall and we’re going to see it as we get near Christmas," Art Cashin, director of floor operations at UBS, told CNBC.

Already, consumers are indicating they'll be tighter on the holiday-purse strings this year: One in four said they plan to spend less this year, according to a survey by market-research firm NPD Group, up from 18 percent last year.

"For the first time I am predicting flat to declining sales for the holiday season," said Marshal Cohen, chief industry analyst at the NPD Group.

They're even cutting back on the plastic: The number of consumers who said they planned to "spend on credit" was down 2 percent.

"Consumers will be keeping careful watch on their credit card-spending this season," Cohen said. "I think many will refrain from purchasing an indulgence or splurge gift, and for the first time in years, may actually cut people from their shopping lists."

Ouch. That's cold, Santa.

Has the economic slowdown affected your plans for holiday spending this year? Write to us: