Ahh yes, a good caution. But some of us believe that the best indicator of the economic future is the six-month predictor of the stock market.
And July 2009 was the strongest July in decades for the stock market. You saw that?!
So, to us, that fact should bolster the optimism of retailers for this holiday season. It's the cause-effect, cause-effect cycle: the stronger stock market leads to improved consumer confidence; consumer confidence drives consumer spending, which should jump up smartly in December-January (six months after the strongest July in decades.)
That's our view. What's yours? (And, shall we save a date in December for lunch?)
2 comments:
I can’t in good conscience suggest to independent retailers that they should be anticipating anything more from the upcoming holiday selling season than what they’re experiencing currently. To do so would be financially irresponsible, in my judgment.
Yes, July was a good month for the stock market, and the second quarter GDP report released last week certainly suggests that we should see positive GDP growth in the third quarter, but the consumer is clearly still lagging in a way they have not in prior rebounds. That was made clear from the recent report from the Conference Board on consumer confidence. The Consumer Confidence Index was down for the second month in a row, as were the two component indexes, the Current Index and the Future Expectations Index. The job market continues to weigh heavily on consumers, and the unemployment rate is not likely to start coming down before next spring.
Retail unit sales, price points and margins remain under extreme pressure, as we see clearance discounts this summer rivaling those that we saw last January and February, and customers cherry-picking back-to-school merchandise. Even though we’ll be going up against weak fourth quarter comps, independent retailers should anticipate the back half to be just as challenging as the first half was.
To suggest that strong holiday sales are in the offing is to suggest to independent retailers that they should be ramping up inventory levels in anticipation of those sales. That is the last thing that independent retailers should be doing right now. The odds of holiday sales remaining weak or growing very modestly are far greater than the odds of holiday sales surprising on the upside. In this environment, it’s not prudent to plan a sales increase until an increase actually occurs. Planning inventory conservatively, in line with conservative sales plans, still leaves enough merchandise to support a modest increase. Investing in additional, speculative inventory is to invest precious cash in inventory that is more likely than not to still be on hand after the holidays, requiring deep discounts to move through, further imperiling cash, and viability.
The very best independent retailers are working very hard right now to add value to their value proposition, enhance their customer experience, and further develop their relationships with their best customer. But they are also managing their businesses very prudently.
Too many independent retailers remain under severe financial stress. This is no time to be swinging for the fences. I sincerely hope that Pat Johnson and Dick Outcalt are proven right, but independent retailers would be well advised in this challenging environment to proceed with caution and prudence.
I'm have been on Pat & Dick with this all along.
I'm a risk-taker (for better or for worse) and I feel that this holiday season is the time to ramp it up (for better or worse).
As a small retailer, it's so much easier to shine now. First, there are fewer retailers. Second, those big guys are under all the pressure described above and their stores are BORING.
I say, Go for Wow Now!
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