This Long Winter Will Separate The Smart Retailers From The Dumb

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This has been an exceedingly grinchy holiday season thus far for retailers.  Despite expert predictions that total “holiday sales will be up 4.1%,” numbers out of the gate have been, thus far, exceptionally dim.Despite claims that this year’s sales would save retailers from what’s been an ugly 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”), news emerged yesterday that “sales in the two months before Christmas increased (only) 0.7 per cent.”  While optimists (including the National Retail Federation, the nation’s largest retail trade group) are predicting “sales in the November and December period to be up 4.1 per cent to $586.1 billion this year,” it’s time to get real.

Nothing’s saving this retail season. 

The excuses for poor pre-25th sales are already pouring in – consumers were waiting for post-Christmas day deals. Hurricane Sandy hit pocketbooks. Consumer confidence is about to rebound. An inevitable resolution to the fiscal cliff will urge shoppers back into store lines.

While the first three excuses have their own (on-point) detractors, it is the final point that deserves perhaps the most intense scrutiny.

In short, the fiscal cliff is coming and the United States is about to drive off it into the economic abyss. Attempts at negotiation have resulted in little middle ground, and, regardless of political affiliation, it’s easy to see nothing’s getting done in Washington before the New Year.  So, yes, the fiscal cliff is coming, the result is all but inevitable (an event that could end up totaling $804.5 billion (or 5.1% of American GDP) in cuts), and it won’t be mid-January until we see a resolution. And while only “17 per cent of shoppers were spending less due to cliff fears,” perhaps the point is moot, as the damage has (psychologically for retailers, anyway), already been done. 

So what does this have to do with the bleak American retail landscape?

For months, retailers, both large and small, have (predictably and historically logically) banked on holiday sales to catch up (particularly during slow years); this year, however, smart(er) retailers saw the trends and truths coming down the financial pipeline and prepared accordingly, integrating online sales systems, social media outreach, and customer touchpoints, all while maximizing pos technologies and processes.

Instead of simply and blindly relying on predicted industry-wide spending/growth, the retailer that prepared ahead-of-time by reducing expenses, managing inventory build, and minimising markdowns, will most likely survive this diminished holiday season – and inevitable drop off the fiscal cliff – and end up, at least alive, if not thriving, on the other side.

After all, we all know we can’t count on  much when it comes to effectively managing businesses.  Only on-point preparation can and will keep small business – and the United States – going.

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]