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Here in Chicago, shopping for last minute holiday gifts, it was easy to spot a trend that routinely presented itself in the checkout line. At the cash register, customers were, time and time again, using just that: cash, to pay for their purchases. Why?Things are tougher. Money’s tighter. Consumers are watching precisely what they spend.
In short, this year’s retail numbers have turned out, inevitably, to be uglier than anticipated.
Despite a Chinese official’s claims earlier today that the “US may be a “bright spot” for the global economy in 2013,” retail numbers from this holiday season may be far from, well, bright. Notwithstanding the fact that “U.S. economic growth accelerate(d) to 3.1 per cent” in November (a fact belying an increase in inventory build, not structural increase in growth across the country), the American consumer is (and has been recently) sceptical, with confidence falling in December to a five-month low.
Consequently, while retailers banked this year on a rebound holiday season to make up for a dismal 2012 (after all, “holiday sales are a crucial indicator of the economy’s strength. November and December account for up to 40 per cent of annual sales for many retailers), it looks like the American consumer thought and spent and behaved otherwise. In fact, experts announced earlier today that “U.S. holiday retail sales this year were the weakest since 2008, when the nation was in a deep recession.
Most importantly, “sales in the two months before Christmas increased 0.7 per cent,” while “many analysts had expected holiday sales to grow 3 to 4 per cent.” Subsequently, despite attempts to sell sex, offer unprecedented discounts, and deal in new, hybrid deals, retailers found themselves victim to that one immutable fact: when pressed against the financial wall, the American shopper will behave, spend, and consume in the most logical way possible.
Pulling tight the purse strings and spending what’s only in the pocket.
Margaret Bogenrief is a partner with ACM Partners, a boutique crisis management and distressed investing firm serving companies and municipalities in financial distress. She can be reached at [email protected]
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