Local retailers offer more buying options in midst of economic downturn
As the holiday season approaches this year, retailers are nervous. In fact, two local retailers, long-time staples of the mid-Missouri economy, recently told me this holiday season will either break them, or allow them to continue into 2009. After many years in business, it all comes down to the next few weeks to determine their survival.
That’s a shame. But they are not alone. If you read the headlines, you can see that many of the big guys are starting to go under. So, it only follows that our locally-owned retailers will feel the same pinch, only without large corporate infrastructures on whom they can depend for support.
The National Retail Foundation offers interesting insights into not only the present state of retailing in the U.S., but also some strategies for future sustainability.
For instance, it appears that while the traffic at brick and mortar stores is declining in this sluggish economy, online sales are expected to top $204 billion this year, a 17 percent increase over 2007. NRF’s research indicates that apparel, computers and automobiles will be the biggest categories. When face-to-face sales are struggling, what is keeping online buying strong? Value and convenience.
Apparently some of us shop online to get the best value without having to go from store to store to comparison price. Others simply don’t want to go to the malls and want the convenience, regardless of price. Which leads us to Cyber Monday.
The Monday after Thanksgiving is now the online equivalent of the traditional Black Friday after Thanksgiving. This year, it appears that online retailers will be focused on offering shoppers one-day promotional efforts on Cyber Monday, such as specific deals, email offers, free shipping and one-day rock-bottom prices. To the dismay of our employers, more than 57 percent of online shoppers will do their buying from their office computer.
To drive traffic to their physical locations on Black Friday, more than 74 percent of retailers plan to use their Web sites and e-mail marketing messages to pitch special in-store promotions.
Data indicate that we will spend $24.9 billion on gift cards and certificates this year, a nearly 6 percent drop from 2007. Reasons for the decline appear to be that many consumers feel the cards are impersonal; others feel they can get more for each dollar by picking up an actual gift at a lower, pre-season sale price; and a few feel uncertain about whether retailers will be in business long enough for the recipient to use the gift. However, NRF’s research indicates we still want to receive gift cards-particularly this year when it’s harder and harder for us to cover the necessities we need. Having the option to snag a couple of new tires instead of receiving an e-picture frame is really a nice gift.
To encourage continued retail spending, many stores are easing up on their return policies, at least for a few months following the holiday season. This can be a dicey strategy, however, as return fraud is expected to hit retailers for about $3.5 billion this year.
Gift buying categories will be constant from 2007, with most of our spending occurring in the apparel, electronics, CD, DVD and video game categories. The number of consumers who will use their debit cards or cash to purchase holiday gifts will increase. Personal checks are about to vanish completely, with only 4.3 percent of consumers expecting to use them for gift buying. And because we don’t want to use our credit cards, many stores have revived that old seasonal stand-by, lay-away, as a customer service convenience.
Lay-away isn’t just a good strategy for the big retailers; it works for the locally-owned smaller shops, as well. One jeweler told me he began offering lay-away this year, and his sales are already up as consumers seek to avoid paying additional finance charges to credit card companies.
Finally, overall spending this year is expected to rise only 1.9 percent over last year’s figures. Price-and price alone-will be the biggest factor in buying decisions. Consumers will make a budget for holiday spending, and they will adhere to that budget more strictly than ever before as they look for the best deal. Quality, convenience and customer service involved in the sale will take back seats to the biggest bang for the buck.
Our spending on family members will decline. While we can ask members of our households to understand our current financial constraints, no one wants to slight friends, co-workers or teachers. Extended family gift exchanges might disappear from the holiday landscape as well this year.
As we enter this holiday season, let’s remember that our retailers add color, texture and interest to our local economy. They are what set our community apart from all the others and provide us with unique options to the traditional retail mix at large shopping complexes.
We need to patronize them and help ensure they remain viable. We’ll all have a happier holiday season.