While some pundits are now talking about how great this holiday shopping season will be, I’m just cautiously optimistic.
10%+ unemployement really does hurt. Consumers still won’t spend like it’s 2007 because we simply can’t (less cash, less credit, behind on mortgage payments, mortgage still under water, concerns over rising prices, etc.), and we actually know better (consumers are actually saving money – I love that graph!). At the same time, merchants have cut back on inventory because they know better (they don’t want to be stuck with tons of inventory) and simply can’t buy goods (they have credit concerns as well).
But there are some positive signs which will drive strong growth in selected areas. I’m predicting some high end retailers will do particularly well. Why? First, rich people feel richer as their stock portfolios have risen 60% since the scary lows of March. Second, parts of Wall Street are seeing 40% increases in bonuses. Third, a lot of people feel we’ve hit a bottom and therefore are willing to spend a more.
Moving to the other end of society (everyone who doesn’t work at Goldman???), the big discount chains will continue to do well as consumers are looking for great bargains and deals. We want good stuff cheap. Walmart and Target will help us save money and live better. And because you’re already shopping at Walmart for your essential holiday toys for your tots, why not pick up a holiday toy for the big kids as well? The big discount chains will move plenty of 42″ LCD HDTVs and other electronics this holiday shopping season.
And what about online retailers?
comScore predicts 3% year over year growth. Amazon will do incredibly well, again. And smart online marketers will benefit as consumers compare prices looking for the best deals. We’ll start our search at Google, check out organic listings, sponsored listings (fancy Product Ads and Extension Ads), and OneBox listings in their cool new 5 Pack format, head over to an affiliate site for a coupon, and make sure there’s free shipping before we purchase. There will be a lot of curiosity clicks and a lot of comparison shopping, but the online retailers working multiple online marketing channels effectively (SEO, PPC, Email, Affiliate, Comparison Engines, etc.) in concert with smart promotions (free shipping) will succeed. You will hear about 10% year over year growth for some online retailers.
Hopefully that sounds cautiously optimistic enough. Not as much doom and gloom from me. But know that positive year over year comparisons will be easy to make. There will be a tendency for stupid news outlets to talk about incredibly strong holiday shopping numbers. Please take some of the reports with a grain or 7 of salt. Coming off the worst year in decades, we should pat ourselves on the back a little, but just because mall traffic is up, it doesn’t mean consumers have gone back to their old spending ways.