By Mark Huffman
ConsumerAffairs.com
October 29, 2009
There's good news and bad news for consumers as they head into the holiday shopping season. The good news? There will still be plenty of price competition, making for some bargains.
The bad news, however, is there won't be nearly enough bargains to go around. Last minute shoppers are likely to encounter bare shelves instead of name brand merchandise at give-away prices.
"The best inventory--all the stuff that turns out to be the most desirable this year--will be gone by December 7," said Stevan Buxbaum, executive vice president of Agoura Hills, Calif.-based Buxbaum Group, a consulting and turnaround investment firm.
With the economy in full meltdown mode this time last year, it was too late for retailers to react. As a result, Buxbaum says stores were stuck with inventory they couldn't sell. The calamity for stores turned out to be a bonanza for consumers -- those who were still spending money.
This year appears to be very different. Even though it appears the economy is recovering from the recession faster than anyone expected, decisions made early in the year will impact consumers' choices.
"Retailers were so nervous they over-constricted their inventories," said Buxbaum, who looks for comparable store sales to be in the flat to negative one percent range for the season. "They are now scrambling to stock up. The problem is that we have a worldwide supply chain. Much of the inventory comes from Asia and can sit on a boat for up to six weeks before it gets here. Beefing up inventories in time for the holiday season will be virtually impossible."
And that means parents hunting for hot-sellers like Disney's Netpal laptop or the Zhu Zhu Pets Hamsters might have a tough time fulfilling their kids' holiday wishes. With retailers running out of sought-after merchandise in early December, last minute shoppers may have to resort to some unusual, or non-traditional gifts.
Price war
But when consumers are able to find good gifts, they may pay less for them. Amid dismal holiday sales forecasts, meanwhile, Wal-Mart has embarked on a price war in which it plans to slap discounts on new groups of products every week until the season is over.
The world's largest retailer is now selling 100 different toys for $10 each, and will make especially aggressive markdowns on books, DVDs, video games and other entertainment products.
"The online price-war in best-selling books between Wal-Mart, Amazon and now, Target, speaks volumes about the cutthroat nature of retail in 2009," Buxbaum said.
That may be a smart move, considering the consumer in 2009 is simply looking for value.
The top one percent of richest Americans might unwrap a MacBook Pro or find a Lexis SUV parked in the driveway. But the vast majority of shoppers will not be maxing out any credit cards this year at the likes of Nieman Marcus, Buxbaum says.
"We have gone from the 'aspirational' shopper--people who spent beyond their means for the sake of status or the sheer thrill--to the 'desperational' shopper," he observes. "Now, most people are just trying to find value."
