While the current economic uncertainties have affected all business and industry, perhaps none are more concerned than retailers. Money is tight and consumer spending is plummeting — not a good harbinger for the upcoming holiday season.
The National Retail Federation (NRF) is already sounding the alarm. On September 23, the NRF released its forecast for the 2008 holiday season, projecting sales will rise 2.2% this year to $470.4 billion. This gain would fall well short of the 10-year average of 4.4% holiday sales growth, and would represent the slowest growth since 2002 when holiday sales rose 1.3%.
“Current financial pressures and a lack of confidence in the economy will force shoppers to be very conservative with their holiday spending,” said NRF chief economist Rosalind Wells. “We expect consumers to be frugal this season and less willing to splurge on discretionary items.”
Nervous, but no panic
Bob Wilson, executive director of the Mississippi Main Street Association (MSMA) in Jackson, said he is definitely hearing worry over the current environment from MSMA-member communities, but added that he hears little talk of a crisis.
“I am hearing concern, but not panic,” Wilson said.
Wilson explained that the majority of Main Street merchants are small, unique, specialty retailers. They know their customers and have more than established themselves.
“So, they are not as worried as the ‘big boxes,’ he said. “It’s the large retailers that are very concerned over the upcoming holiday season.”
Retailers need a boost, and many are seeing just that. Special promotions are being offered by individual businesses, malls — even whole communities — to help the cash registers ring this holiday season.
Wilson said many communities are turning to co-op advertising and holiday trails in an effort to boost sales. He said various strategies have been successful on the post-Hurricane Katrina Mississippi Gulf Coast, and similar promotions are being explored in the Delta and Northeast Mississippi, as well.
A good example is the City of Corinth, which is doing its part to help its downtown merchants. On November 8, the city’s sky will be lit by 8,000 luminaries to remember the men who were casualties at the Battle of Corinth during the Civil War. The luminaries will be placed at the site of Battery Robinett, and will follow a path into downtown Corinth where businesses will host open houses in an effort to jump start the holiday-buying season.
Bailout: good or bad?
The NRF strongly supported the $700-billion financial bailout bill that failed in the House of Representatives.
“This crisis is not about Wall Street versus Main Street,” said NRF senior vice president for government affairs Steve Pfister. “Our nation’s financial system is a two-way street that directly affects every American and every facet of our economy. If Wall Street is not stabilized, the ability of American consumers and businesses to obtain the credit needed to keep our economic engine running and to continue our nation on the path to economic recovery will be imperiled. In these trying economic times, that is a risk that we cannot take.”
Others, however, are just as convinced that a bailout, long-term, would be terrible for retailers. One of those is Rob Slee, president of the Charlotte, N.C.-based private investment banking firm Robertson & Foley who will speak October 7 in Jackson during the Financial Planning Association’s Financial Planning Week.
“It’s is very short-sighted,” Slee said. “I believe we are going to see three to five years of very tough times. The bailout would make the downtime longer and more painful.
“Unfortunately, Main Street has been in a catch-up mode for a long time. Main Street simply is not globally competitive. And for a vast majority, it is too late now to do anything about it.”
Slee added that not all is lost. For those businesses that immediately change their strategies — re-conceptualizing, as he calls it — there will be opportunities for growth. And it should be fairly inexpensive.
“For those companies that make it to, say, the spring of ‘09, there should be very easy and inexpensive ways to pick up market share,” he said. “The challenge for many businesses will be holding on that long.”
Contact MBJ staff writer Wally Northway at firstname.lastname@example.org.