Desperate retailers seek holiday season rescue
Too_Many_Tools
vendors and suppliers.
I wonder if we will see some companies close and mergers occur next
year after the holiday numbers are tallied?
TMT
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 Economy.com 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 eLayaway.com.
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
executive.
Chris L Peterson
<too_man...@yahoo.com> wrote:
>This holiday season should prove especially interesting for astronomy
>vendors and suppliers.
>
>I wonder if we will see some companies close and mergers occur next
>year after the holiday numbers are tallied?
I find it interesting that quite a lot of small businesses (which
includes most astronomy vendors and manufacturers) are actually doing
reasonably well in this economy. Not generally peak business, but very
sustainable.
IMO, that is because small business can respond faster to change, can
successfully scale down when necessary, and often operates with a more
realistic economic model. The big companies described in the attached
story are the ones that don't have a sustainable business model. They
are too big, too unwieldy, and too badly managed. They are too dependent
on producing short term returns for their investors. Even a few percent
drop in sales is enough to drastically affect them.
_________________________________________________
Chris L Peterson
Cloudbait Observatory
http://www.cloudbait.com
Too_Many_Tools
> On Sun, 22 Nov 2009 07:34:38 -0800 (PST), Too_Many_Tools
>
Interesting comments Chris.
Do you have some stats that show this?
I have not looked but the concept makes sense.
I do expect a significant number of closures in the first quarter of
next year since I do not expect the holiday season to do well...my
guess worse than last year.
TMT
Chris L Peterson
<too_man...@yahoo.com> wrote:
>Interesting comments Chris.
>
>Do you have some stats that show this?
No, my observations are largely anectodal. I operate a small business,
and I live in an area where most people operate their own businesses, or
work for them. While these folks I know have seen things slow down, it
isn't resulting in them going out of business. They have adapted.
From past posts and general observation, I think the smaller makers of
astronomical equipment are managing okay. I don't expect to see many (or
any) going out of business soon. It is the distributors, who don't make
anything themselves, who are probably most vulnerable. Distribution-
especially these days- doesn't add much value for either the
manufacturer or the customer; there's not so much money to be made
there, the margins are often slim, and the distributor has little
control over the product pricing. I wouldn't want to be in that business
right now!
Davoud
> From past posts and general observation, I think the smaller makers of
> astronomical equipment are managing okay. I don't expect to see many (or
> any) going out of business soon. It is the distributors, who don't make
> anything themselves, who are probably most vulnerable. Distribution-
> especially these days- doesn't add much value for either the
> manufacturer or the customer; there's not so much money to be made
> there, the margins are often slim, and the distributor has little
> control over the product pricing. I wouldn't want to be in that business
> right now!
Especially if you were Company 7. IMO they are a value-added reseller
because they don't drop-ship; everything comes to them and they unpack
it, test it, collimate if necessary, certify it, and re-pack before it
goes to the consumer. That requires skilled labor, and C7 has to try to
compete with the drop-shippers on price in a market where many people
know the price of everything and the value of nothing.
Fortunately, C7 does systems integration for customers with special
requirements, and that helps smooth the dips in the retail market --
though the specialty business has its own ups and downs that may
parallel those in the consumer market.
Disclaimer: Martin Cohen, owner of C7, is a personal friend. What I
have written here comes from personal observation. I buy from C7 at
their regular prices.
Davoud
--
I agree with almost everything that you have said and almost everything that
you will say in your entire life.
usenet *at* davidillig dawt cawm
Chris L Peterson
>Especially if you were Company 7. IMO they are a value-added reseller
>because they don't drop-ship; everything comes to them and they unpack
>it, test it, collimate if necessary, certify it, and re-pack before it
>goes to the consumer.
Exactly. They have found a way to add value that people are willing to
pay for. Other distributors have, as well. But I think that most
distributors don't operate by that model, and that's going to make
things increasingly difficult for them.
Company 7 could provide a lesson to many distributors, but I think they
will remain more of an exception than the rule.
Too_Many_Tools
> On Sun, 22 Nov 2009 10:27:13 -0800 (PST), Too_Many_Tools
>
The reason why I ask about data is that I am seeing the
opposite...small stores closing left and right and only large big box
stores remaining.
Since a large amount of astronomy equipment today is manufactured by
only a few companies, most of the names we deal with are
distributors..aka retailers.
Has anyone seen numbers of how small versus large retailers have done
this last year?
TMT
Chris L Peterson
<too_man...@yahoo.com> wrote:
>The reason why I ask about data is that I am seeing the
>opposite...small stores closing left and right and only large big box
>stores remaining.
I think we're probably looking at different things. The small business
people I know are not retailers, but are providers of goods or services.
I think those sorts of businesses are much more likely to weather bad
economic times than retailers.
I predict that most astronomical equipment designers and manufacturers
will survive; the thinning is likely to be amongst the distributors. The
distributors that will do okay will be those like Davoud identified,
which are able to provide some sort of value added service.
Quadibloc
> On Mon, 23 Nov 2009 08:22:22 -0800 (PST), Too_Many_Tools
> <too_many_to...@yahoo.com> wrote:
> >The reason why I ask about data is that I am seeing the
> >opposite...small stores closing left and right and only large big box
> >stores remaining.
> I think we're probably looking at different things. The small business
> people I know are not retailers, but are providers of goods or services.
> I think those sorts of businesses are much more likely to weather bad
> economic times than retailers.
Yes: retailers have huge fixed expenses (rent) that they have very
limited options in cutting. Bad economic times are always very harsh
for small businesses in the retail sector.
John Savard
yourmommycalled
> Chris L Peterson:
> That requires skilled labor, and C7 has to try to
> compete with the drop-shippers on price in a market where many people
> know the price of everything and the value of nothing.
>
Davoud This is an extremely important concept and cannot be emphasized
enough. There are people who have the necessary skills and time that
they can fix QC problems without support. If you've figured enough of
your own mirrors it isn't difficult to tell if you have bad optics and
that they need to be returned, HOWEVER, and this is a very big
qualifier most people buying a "premium" mass produced scope don't
have the request skills. These people should be buying from Company-7
or other reputable dealer who can look/test the scope before the
consumer gets it. Unfortunately few people understand the price of an
item and it value.
Too_Many_Tools
Another report FYI.
TMT
AP-GfK Poll: Debt turning shoppers into Scrooges
By JEANNINE AVERSA, AP Economics Writer Jeannine Aversa, Ap Economics
Writer
WASHINGTON – A lot more Americans are feeling stressed out by debt
this holiday season, raising the glum likelihood they'll behave like
Scrooge rather than Santa.
In fact, fully 93 percent say they'll spend less or about the same as
last year, according to an Associated Press-GfK poll. Half of all
those polled say they're suffering at least some debt-related stress,
and 22 percent say they're feeling it greatly or quite a bit. That
second figure is up from 17 percent just last spring, despite all the
talk about economic recovery.
Most people — 80 percent — say they'll use mostly cash to pay for
their holiday shopping, and that generally means buying less.
For example, Joy McGavin, 26, of Pittston, Pa., says she will cut back
on holiday gifts by a few hundred dollars this year and pay for
everything with cash.
"Family — nieces and nephews — we won't be able to afford this year,"
says the stay-at-home mother of three. They now shop at Big Lots — not
Wal-Mart. "They're too expensive this year," she says.
Her husband, Robert, had been working two-full time jobs, as a
mechanic at a garage and at an auto parts store. Recently his retail
job was cut back to part time. "We don't have as much as we had last
year," McGavin laments. They don't have health insurance and have
racked up major medical bills.
Diane Morrison, 57, of Flemington, N.J., says simply, "I'm going to
cut back." She's clipping coupons and "looking for big sales."
She owns a payroll company, and many of her clients are laying off
workers. Some of the companies are folding, she says, and "I'm feeling
more stressed because I feel my income will go down because of what's
happening with my business."
Morrison and the McGavins are hardly alone with job problems.
Unemployment has rocketed past 10 percent for only the second time
since World War II, making it harder to pay monthly bills. Home
foreclosures have spiked to record highs, and defaults on credit card
debt are rising.
What does that mean for retailers in their most-important season?
"Cash serves as a very direct governing force upon spending," says Dr.
Alan Hilfer, director of psychology at Maimonides Medical Center in
Brooklyn, N.Y. "If you have $100 in your pocket, and that's all you
can spend, you'll look around and make a decision based on the amount
of money you have." Credit cards, on the other hand, allow people to
make more impulse purchases.
In the survey, people who intend to spend less during the holidays
reported suffering from higher debt stress than those who plan to
spend the same or more, said Paul J. Lavrakas, a research psychologist
and AP consultant who analyzed the results.
Those who plan to use cash to pay for most of their holiday season
purchases have higher stress levels, he said. So do those who will
carry over at least some of their holiday season credit card charges
because they won't be able to pay the bill in full when it arrives.
Hilfer said that when debt increases and becomes a focus of anxiety,
it forces people to start thinking more long term.
"They won't allow impulse buying and won't splurge as much because
they are thinking that next year they may need to have the money to
fix the motor on the washing machine, so they can't spend that money
now," he said.
How consumers behave during the holidays and beyond is a critical
force determining how strongly the economy snaps back from the worst
recession since the 1930s. Consumer spending is the single-largest
driver of overall economic activity.
The traditional kickoff of the holiday sales season is Friday — the
day after Thanksgiving.
This time of year is crucial for merchants, accounting for up to 40
percent of their annual sales. The National Retail Federation believes
holiday sales will decline this year, but the drop won't be as steep
as last year when the country was deep in recession.
Looking to next year, consumers won't be in much of a mood to go on a
shopping spree because of high unemployment and tight credit,
according to the National Association for Business Economics. Consumer
spending will rise a lackluster 2 percent next year, restraining the
recovery, NABE forecasters said. Unemployment now at 10.2 percent,
will average 9.8 percent.
For people who do plan to charge their holiday purchases, 75 percent
say they'll pay off the charges in full when the bill arrives.
The average amount owed on credit cards is $5,600, the poll said, up
from $4,900 in the spring.
More broadly, people carry an average of about $46,000 in debt —
mortgages, credit cards, auto loans and other consumer debt. That's a
far bigger load than in the early 1980s when the jobless rate last
topped 10 percent. In 1982 per capita debt totaled about $14,000 in
today's dollars.
The AP-GfK poll involved interviews with 1,006 adults and was
conducted Nov. 5-9. The margin of sampling error was plus or minus 3.1
percentage points.
___
AP Director of Polling Trevor Tompson and Associated Press Writer Ann
Sanner contributed to this report.
On the Net:
Questions and results at http://www.ap-gfkpol l.com.
Too_Many_Tools
FYI..
I especially liked this comment...
"You clearly aren't going to see the kind of discounting that you saw
last year," says Stephen Sadove, chairman and chief executive of Saks
Inc. Wayne Hood, an analyst at BMO Capital Markets, agrees. "We're
expecting 50% [markdowns] to be kind of the norm this year vs. maybe
75% last year," he says.
Did anyone see 75% discounts in astro equipment?
TMT
Tuesday, Nov. 24, 2009
Holiday Shopping: This Year It's a Game of Chicken
By Janet Morrissey
For many consumers, Black Friday, Cyber Monday and the weeks that
follow will be a good time to sit on their hands.
Cash-conscious shoppers are hoping to see a repeat of 2008's eye-
popping discounts, when markdowns, even on high-end fashion duds,
exceeded 75% in the weeks leading up to Christmas. Although retailers
are insisting that they won't resort to jaw-dropping discounts this
year, what happens will ultimately depend on how much and how quickly
they get consumers to start spending. And it won't be easy. (See
TIME's Holiday Gift Guide 2009.)
"Being frugal is in, and being lavish is out," says Beth Strobel,
director of marketing at PayPal. So shoppers are programmed to wait
for huge bargains.
Take Jessica Laux, a 32-year-old mother of two in Pittsburgh, Pa., who
shops regularly at Saks and Nordstrom. "I'm hopeful there's going to
be similar deals as there were last year — and almost expecting it,
given the current state of the economy," says Laux. She remembers
2008's steep holiday discounts and is unimpressed with the paltry 30%
markdowns that are currently being offered. "Seeing 30% isn't going to
make me shop earlier," says Laux, who adds that she'll do the bulk of
her shopping in the final two weeks before Christmas if the markdowns
don't come sooner. "I'm not afraid to wait," she says.
Laux is a retailer's worst nightmare, and there are plenty more like
her.
A holiday outlook report released on Monday by AlixPartners LP says
88% of consumers plan to spend the same or less on gifts this year
than they did in 2008. The survey, which polled about 3,500 people
nationwide in early November, found that 60% of consumers plan to
spend less on gifts, and 55% say they'll wait for deep discount sales
and specials before opening their pocketbooks. More than half say they
plan to buy less-expensive merchandise than a year ago, and 52% say
they'll give gifts to fewer people. "This is a fundamental shift,"
says Bryan Eshelman, managing director at AlixPartners LP. (See
pictures of people shopping on Black Friday.)
But retailers are digging in their heels, insisting they won't slash
prices to 2008 levels. Last year, retailers had loaded up on goods for
the holiday season but were then hit with the collapse of Lehman
Brothers, upheaval in the credit markets and the AIG crisis, which
sent tremors of fear far and wide. Consumer spending dried up, and
shoppers abruptly disappeared. Retailers found themselves sitting on
huge inventories of unsold goods, and many frantically started
chopping prices to clear shelves.
But retailers have planned for this season's frugality, ordering up to
20% less inventory, making them less susceptible to mid-December price-
slashing. "You clearly aren't going to see the kind of discounting
that you saw last year," says Stephen Sadove, chairman and chief
executive of Saks Inc. Wayne Hood, an analyst at BMO Capital Markets,
agrees. "We're expecting 50% [markdowns] to be kind of the norm this
year vs. maybe 75% last year," he says. (See 10 things to buy during
the recession.)
Shoppers who wait too long could be left empty-handed as reduced
inventory levels will mean fewer sizes, colors and selections of
items. "That baby-blue cashmere sweater in medium may not be there on
Dec. 24," says Richard Jaffe, managing director at Stifel Nicolaus &
Co.
Still, the deepest discounting will likely come from retailers that
sell electronics, books and toys, where competition from online
vendors is fierce. Pricing wars have already erupted, with Walmart
going head-to-head with Amazon. The two chopped prices on hot new hard-
cover releases to less than $10 apiece for shoppers who preordered
books on their websites. Similar price battles have been launched in
toys and electronics, with Walmart's chief merchandising officer, John
Fleming, proclaiming, "We're going to be the price leader for this
holiday season." Best Buy's executive vice president of customer
operating groups, Mike Vitelli, says his company will match
competitors "dollar for dollar." (See 10 big recession surprises.)
Retailers know they can't afford to ignore discounting from online
retailers. "If they can't get the consumer off of Amazon and into
their store, then they'll lose the entire share of wallet, not just
the one product that they lost to Amazon," says Rick Smith, author of
The Leap and founder of Marketing50.
But discounting can only go so far before it no longer makes financial
sense. For this reason, promotions and price discounts will likely be
strategically planned, not panic-driven as they were last year, says
Howard Davidowitz, chairman of Davidowitz & Associates Inc., a
national retail consulting and investment firm.
In the end, it will come down to a game of chicken, in which consumers
face off with retailers over price to see who blinks first, says
AlixPartners' Eshelman. But with inventories significantly lower, the
desperate markdowns may never happen. "Retailers are focused much more
on profitability than on sales growth," he says. "So I think retailers
have a better chance of winning that game of chicken this year than in
years past."
Martin Brown
> On Nov 22, 9:34 am, Too_Many_Tools <too_many_to...@yahoo.com> wrote:
>> This holiday season should prove especially interesting for astronomy
>> vendors and suppliers.
>>
>> I wonder if we will see some companies close and mergers occur next
>> year after the holiday numbers are tallied?
A few big stores in the UK fell over in the *run-up* to Christmas last
year after the banks stopped lending even to sound businesses.
Without credit guarantees they were doomed. Unable to buy new stock they
quickly floundered and the failure of one major high street chain took
out a key wholesale distributor of CDs totally annihilating Zavvi which
was previously the highly profitable Virgin Records. The survivor of the
carnage HMV is now an effective monopoly.
But the serious astronomy dealers sales are not really so seasonal. In
the UK a lot of the sales follow on from the AstroFest in February. Only
toy scopes for little Jonny fly off the shelves but mainly in department
stores though presumably the main importer(s) get their cut on the
transaction.
>> 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.
[snip junk on vacuous Merkin consumerism]
> FYI..
>
> I especially liked this comment...
>
> "You clearly aren't going to see the kind of discounting that you saw
> last year," says Stephen Sadove, chairman and chief executive of Saks
> Inc. Wayne Hood, an analyst at BMO Capital Markets, agrees. "We're
> expecting 50% [markdowns] to be kind of the norm this year vs. maybe
> 75% last year," he says.
>
> Did anyone see 75% discounts in astro equipment?
>
> TMT
Of course not! It is the cheap to make worthless but ultra expensive
book price brands and designer name fashion items and other Christmas
tat made in Far East sweat shops that they discount by 50-75% to try and
move it before it goes out of fashion. You see adverts for cloned
copycat versions of their tat polluting most of Usenet these days.
You could be forgiven for thinking the traditional greeting in Hong Kong
was "Copy Watch Sir!" as a guy rolls up his sleeve revealing 10 fake Rolex.
>
> Tuesday, Nov. 24, 2009
> Holiday Shopping: This Year It's a Game of Chicken
> By Janet Morrissey
[snip more adverts for rampant consumerism]
> In the end, it will come down to a game of chicken, in which consumers
> face off with retailers over price to see who blinks first, says
> AlixPartners' Eshelman. But with inventories significantly lower, the
> desperate markdowns may never happen. "Retailers are focused much more
> on profitability than on sales growth," he says. "So I think retailers
> have a better chance of winning that game of chicken this year than in
> years past."
I think that this guys analysis is right on the mark. Only the very
dumbest retailers will be stuck with a vast excess of stock to mark down
this year. They have had plenty of warning that credit is tight. That
wasn't the case last year when the banks fell over one after another.
Regards,
Martin Brown
wsne...@hotmail.com
wrote:
> Too_Many_Tools wrote:
> > On Nov 22, 9:34 am, Too_Many_Tools <too_many_to...@yahoo.com> wrote:
> >> This holiday season should prove especially interesting for astronomy
> >> vendors and suppliers.
>
> >> I wonder if we will see some companies close and mergers occur next
> >> year after the holiday numbers are tallied?
>
> A few big stores in the UK fell over in the *run-up* to Christmas last
> year after the banks stopped lending even to sound businesses.
>
> Without credit guarantees they were doomed. Unable to buy new stock they
> quickly floundered and the failure of one major high street chain took
> out a key wholesale distributor of CDs totally annihilating Zavvi which
> was previously the highly profitable Virgin Records. The survivor of the
> carnage HMV is now an effective monopoly.
>
> But the serious astronomy dealers sales are not really so seasonal. In
> the UK a lot of the sales follow on from the AstroFest in February. Only
> toy scopes for little Jonny fly off the shelves but mainly in department
> stores though presumably the main importer(s) get their cut on the
> transaction.
>
> >> Desperate retailers seek holiday season rescue
> >> by Rob Lever Rob Lever
> >> Sat Nov 21, 11:32 pm ET
>
> >> holiday sales in the face of what promises to be another troubled year-
> >> end shopping season.
>
> [snip junk on vacuous Merkin consumerism]
>
> > FYI..
>
> > I especially liked this comment...
>
> > "You clearly aren't going to see the kind of discounting that you saw
> > last year," says Stephen Sadove, chairman and chief executive of Saks
> > Inc. Wayne Hood, an analyst at BMO Capital Markets, agrees. "We're
> > expecting 50% [markdowns] to be kind of the norm this year vs. maybe
> > 75% last year," he says.
>
> > Did anyone see 75% discounts in astro equipment?
>
> > TMT
Why? Should there have been?
>
> > In the end, it will come down to a game of chicken, in which consumers
> > face off with retailers over price to see who blinks first, says
> > AlixPartners' Eshelman. But with inventories significantly lower, the
> > desperate markdowns may never happen. "Retailers are focused much more
> > on profitability than on sales growth," he says. "So I think retailers
> > have a better chance of winning that game of chicken this year than in
> > years past."
>
> I think that this guys analysis is right on the mark. Only the very
> dumbest retailers will be stuck with a vast excess of stock to mark down
> this year. They have had plenty of warning that credit is tight. That
> wasn't the case last year when the banks fell over one after another.
IOW, supply and demand. Less demand? Then reduce supply. Prices
stabilize, or even go up.