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Desperate retailers seek holiday season rescue

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  • Desperate retailers seek holiday season rescue

    This holiday season should prove especially interesting for
    vendors and suppliers.

    I wonder if we will see some companies close and mergers occur next
    year after the holiday numbers are tallied?

    How are you planning on spending your holiday HSM money?


    Desperate retailers seek holiday season rescue
    by Rob Lever Rob Lever
    Sat Nov 21, 11:32 pm ET

    WASHINGTON (AFP) – US retailers are taking desperate measures to spark
    holiday sales in the face of what promises to be another troubled year-
    end shopping season.

    Merchants are furiously working to ramp up consumer interest ahead of
    "Black Friday," on November 27, the day after the Thanksgiving Day
    holiday that marks the traditional kickoff of the holiday gift season.

    Some are promising price cuts of 50 percent or more on some hot
    electronics, and planning for big events to bring out shoppers for big
    sales promotions.

    Analysts say retailers are struggling to find the right balance of
    inventories and discounts while cautious consumers are hesitating
    about how much and when to buy.

    Clothing retailer Gap has started early with 25 percent discounts,
    while Wal-Mart and Target are offering online shoppers free or
    discounted shipping on many items. JC Penney is boosting Black Friday
    promotions and will open its doors at 4 am for the best deals.

    Steven Dennis, executive-in-residence at Southern Methodist
    University's JC Penney Center for Retail Excellence, said price cuts
    may be deep but are not as broad as some might expect.

    "I think most retailers are desperate for market share," he said.
    "Everyone seems to have the view that business is gong to be flat and
    it is a battle for market share."

    But Dennis said retailers are not in the dire position of last year,
    when they had large amounts of inventory. So price cuts will mainly be
    on a few high-profile items to get consumers into the store "and hope
    they get a disproportionate share of their spending."

    "I don't think deals will be so widespread."

    Dennis said that with retailers focused on lean inventories, most will
    be able to post profits even if sales are lower than in 2008.

    Diane Swonk, chief economist at Mesirow Financial, said she sees
    overall holiday retail sales growing 1.6 percent from last year, but
    that this will essentially be flat when adjusted for inflation.

    "The quality of spending this holiday season will still be dismal,
    however, when compared to Christmases past," she said.

    Swonk said retailers who don't join the heavy discounting "might be
    disappointed with the results."

    "Consumers were already playing chicken with retailers to get better
    discounting ahead of the recession and there is no reason to believe
    they won't be even more cautious about paying full price now, given
    the sorry state of their balance sheets."

    Scott Hoyt at Moody's agrees the outlook is grim, with
    unemployment running above 10 percent.

    Retail spending "will look good compared with last year, but poor by
    any other standard," Hoyt said.

    "Though it will be the first nonrecession holiday shopping season in
    three years, 2009 will again be trying for retailers," he added.

    "In an effort to reduce discounting, retailers have cut inventories to
    well below year-ago levels and are expected to keep them low through
    the holiday season. If merchants have underestimated demand, they
    could end up with bare shelves, losing sales."

    Jon Ogg at 24/7 Wall Street said retailers are anxious ahead of Black
    Friday -- which by tradition is the day in which merchants swing from
    the red into profit for the first time in the year.

    "This is the day that retailers look forward to all year and
    critically depend upon as an anchor to how each retailer's full year
    earnings results turn out," he said.

    "What is amazing is just how much of the deal-making is already out
    before the holiday season starts as retailers key off of each other.
    It is almost impossible to avoid thinking how such a promotional
    Christmas and holiday season in 2009 is going to add pressure to
    margins at almost all of the first-line retailers."

    A survey by Visa USA found consumers plan on spending 161 dollars less
    on holiday shopping than last year and 368 dollars less than they
    planned two years ago.

    In one sign of the times, several retailers have brought back the
    layaway plan, which enables customers to put down a deposit to hold
    merchandise until the full amount can be paid. Sears, Kmart and Toys R
    US are among those offering the plan, and a new online version of the
    program is offered through

    One reason for this is that consumers are stretched and may have less
    acess to credit.

    A survey for the National Retail Federation found 24.9 percent of
    holiday shoppers will pay for gifts this year with cash, up from last
    year?s 22.8 percent. Also, 42.5 percent of shoppers plan to pay
    primarily with debit or check cards and those using credit cards is
    expected to fall 10.1 percent.

    "With many holiday shoppers focused on spending within their limits,
    it's no surprise that fewer people will be relying on credit cards
    this year," said Tracy Mullin, the NRF's president and chief

  • #2
    Can someone explain to me.. why they bother? I mean yea yea getting rid of some excess stock and captureing xmas dollars etc.. but when you sell stuff for 50%+ off are you really still making a profit? Or just trying to drive the other guys outta business by insuring they don't get those dollars?

    seems to me the smarter thing would just be.. have less stock and hold onto it untill it sells at a reasonable price..
    Play Brutal Nature, Black Moons free to play highly realistic voxel sandbox game.


    • #3
      I've talked to some machine shop owners and one company I do work for and it looks like they will be doing what they can with what they have for years to come. The machine shops in my area are slow and using overtime rather than hiring just as the company I do work for. The work seems to come in spurts and they don't see it getting better for a long time.

      As to retail sales, it's a buyers market and will be for a long time. The paper today said the stock market people figured out a new way to market the bad home loans so they can profit from them and put the bad debt on the government loan system. That means the tax payers will be assuming a big debt in the near future.

      I have seen where some companies are coming back from China and that may help the economy.

      The unemployment level is much higher than the government says and it will get higher every time students graduate and go into the work force.

      Why we keep basing the economy on the lying thieves at the stock market I don't understand. It should stand on it's own as if it were a gambling casino because it is just like a casino in that your gambling your money on a bet.
      It's only ink and paper


      • #4
        I don't care if they go bankrupt. Large retailers are nothing short of big leeches on the local economies. Sucking everything they can, putting small retailers out of business, ruining city blocks with their big ugly stores and the massive traffic problems they create and offering nothing to the local communities except for a few minimum wage jobs. When your parking lot is bigger than three football fields what you are is wholesale mover of merchandise at lowest possible costs. After you've maximized the utility of your business model, where do you go from there? What's there left to cut? Do you think they can get dumber people manning the cash registers? Those places are ridiculous, with a line of 30 registers, and never more than 3 of them open, even at holiday time.


        Appearance is Everything...


        • #5
          How are you planning on spending your holiday HSM money?
          An AXA QCTP + holders, some tooling, grinding wheels, and maybe some metal.

          Looking at a few woodworking hand saws and chisels too. They're expensive!

          We'll see what he budget will allow.


          • #6

            You might see a little price cut. Not much. The margin ain't there.

            When you talk the slum at WallyMart and the other mass merchandisers, they pay pennies on the dollar for what they sell you. If they put it on "sale" for 70% off, they are still doubling or tripling their cost.

            Just BECAUSE it was in the paper today about the "shortage" of pumpkin for pie for Thanksgiving, "We're all out of pumpkin.", sign boasted 2.99 per 29 ounce can. Local store I go to sells it regularly for 1.79 per can.

            Price you are charged for ANYTHING is up to the vendor. FEW items you see in the clearance bin will be priced below their cost. They do not "clear" 3.69 items for a dime unless it cost a dime or less.

            Steel and machining tools are commodities, and they don't get to a "Use BY" date. Last year's steel will go for today's price. They are kind of stuck with the price problem. Buy too much stock when it is high, don't sell it, then try to recover your money when steel falls, you are gouging.

            That must be a tough business, you HAVE to balance your buying with your selling.



            You got to remember, though, that it don't go stale.


            • #7
              I have tried to explain to the misses about sales etc, most of the things reduced are whats left on the shelf items and what they make is all profit.
              All the previous ones should have paid the initial buying costs and if they remain on the shelf then cash is tied up and these days cash flow is everything - unless you happen to be a BANK where its all a win, win scenario.

              I have tools I don't know how to use!!


              • #8
                I already spent my Christmas cash. And I'll be playing with those new toys well into the New Year.

                Doc's Machine. (Probably not what you expect.)


                • #9
                  Funny how it's always the big sellers who can offer "Massive Savings". Remember the little guys who USED to be round the corner who ALWAYS had whatever you wanted plus the advice on how to use it????

                  Any of you guys over on the non European side of the pond want to know what a Gen-u-ine British Pub is like?? Better get over here quick, the Supermarts and Government are killing them fast, and that isn't an O/T statement.

                  Regards Ian.
                  You might not like what I say,but that doesn't mean I'm wrong.


                  • #10
                    The most important thing to remember for family and friends. Is DO NOT buy gift cards as like last year, if you are holding one and the company goes into reorganization, or bankruptcy. the cards will be some of the first unsecured credit to go!

                    Never could understand what is wrong with giving cash money The only problem or complaint is, it isn't enough

                    Will be getting an air compressor some time in the new year, and thinking of a flypress,( screw press,blanking press)

                    As far as Christmas presents for the family that was done a while ago.
                    Been there, probably broke it, doing that!
                    I am not a lawyer, and never played one on TV!
                    All the usual and standard disclaimers apply. Do not try this at home, use only as directed, No warranties express or implied, for the intended use or the suggested uses, Wear safety glasses, closed course, professionals only


                    • #11
                      Originally posted by PTSideshow
                      The most important thing to remember for family and friends. Is DO NOT buy gift cards as like last year, if you are holding one and the company goes into reorganization, or bankruptcy. the cards will be some of the first unsecured credit to go!

                      Never could understand what is wrong with giving cash money The only problem or complaint is, it isn't enough

                      Given the current state of our government cash could have the same problem

                      Like I tell everybody I give a gift card to-spend it while it's worth something
                      I just need one more tool,just one!