Handicapping the holidays

Madison College business-retail expert Mae Laatsch describes a “Black Friday” scene that had to be seen to be believed. Thousands of shoppers lined up, some as early as midnight on the day after Thanksgiving, ready to invade shopping centers all over the country, some prepared to spread out, work in groups, and communicate the availability of coveted gifts through cell phone texting. The Normandy invasion was executed with less precision, and only slightly less force! But whether it’s Black Friday or Cyber Monday, the enthusiasm of most individual shoppers remains as tepid as the economy.

The Conference Board‘s Consumer Confidence Index dipped to below 40 in October amid growing concerns about business conditions, the labor market, and income prospects. It’s not exactly 1983, when job creation and suddenly strong GDP growth had retail registers going “cha-ching” with stunning frequency, marking the end of a particularly painful recession.

Thank goodness for the diehards – the mothers and grandmothers who probably do some of their Christmas shopping year-round, but have made Black Friday a day of intense game plan execution.

For them, “It’s gotten very intense,” Laatsch agreed. “If you wait until the last minute, it’s going to cost you more money because you are going to spend more. You simply don’t rein yourself in if you wait.”

Laatsch, who is part Madison College professor and part retailer (Olivia’s Gifts), noted the 2.8% holiday shopping increase forecast by the National Retail Federation, which basically mirrors other forecasts.

The incremental progress reflects what else is happening in the economy, as monthly job creation slogs along and modest improvements in quarterly GDP suggest the continuation of a sluggish recovery.

While electronics, clothing, gift cards, books, and jewelry remain the most coveted items (in that order), the NRF expects people to spend more money on themselves than others. I’m not sure what that says about the spirit of giving, but I doubt retailers care who they spend it on, just as long as they spend. A good number of retailers do between 20% and 40% of their annual business in November and December, so they can’t afford to be choosy.

Roughly 50% of these purchases will be done online, and 50% in person, but many gifts will be researched online before they are purchased in the store. “A lot of people still want to feel, touch, and see the product they are buying,” Laatsch noted.

Even more tangible to the small business economy, buying local will be a point of emphasis this holiday season, and not only in buy-local hotbeds like Madison. “This is where the improvement in the economy is going to come from, the small businesses,” Laatsch stated. “Some of my customers have told me that if they see that it’s made in China, they aren’t buying it.”

That probably won’t create an international incident, especially because China needs our economy to bounce back just to improve their collections from a mega debtor. They might have to be more patient, however. Data released in October by Gallup indicates that individual Americans will spend a projected $712 on Christmas gifts this year, almost identical to the $715 they estimated they would spend on Christmas at this time last year. Only about 25% plan to spend at least $1,000 on gifts, another quarter say they will spend between $500 and $999, and about one-third will spend between $100 and $499.

There are pockets of optimism. Wisconsin’s own Kohl’s Corp. reported record third quarter numbers, thanks in part to strong demand for its new Jennifer Lopez and Mark Anthony brands, and expects the registers to ring throughout the holidays.

But Kohl’s is a retailing dynamo, with or without JLo. For most merchants, it’s about getting shoppers in even before Black Friday. We’ll know the economy is back when sparks fly from their registers, too.

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