Recently, the Amalgamated Order of Real Bearded Santas put their white-haired heads together to tackle a looming problem. The group represents about 700 St. Nicks for hire, and with the economy in a tailspin, some Santas have seen their bookings plunge by 50 per cent. When even the old guy himself has been struck down by the recession Grinch, it’s no wonder retailers are feeling spooked.
In a recent research report, Perry Caicco, an analyst at CIBC World Markets, predicted the fourth quarter of 2008 will be the worst in over two decades, based on discussions with retailers. Shortly after, U.S. retail sales figures for October came out showing a 2.8 per cent month-over-month drop—the largest since records began in 1992. Meanwhile, here in Canada, Deloitte & Touche has just released a survey showing that 40 per cent of Canadians plan to be a Scrooge this season and cut back on their spending.
In the U.S., some retailers are already announcing mammoth sales to kick off the holiday shopping season. Saks Fifth Avenue is currently offering 40 per cent off apparel, Neiman Marcus is offering the same off new arrivals, and a recent study found that 45 per cent of retailers are planning big discounts for “Black Friday,” the day after the American Thanksgiving. Even in Canada, where the economy has proven remarkably resilient, stores are following suit.
“It’s already happening here, I’m seeing some sporting goods retailers in Vancouver offering 50 per cent off of everything in the store,” says David Ian Gray, a retail consultant with dig360. “It’s sort of a panic button effect.” Last week Sears held a two-day “surprise” sale with prices on many products slashed between 25 and 40 per cent. Gray says there will be more bargains to come.
The problem for some retailers is that inventories were ordered months before the financial collapse. But even stores that anticipated the slowdown and scaled back are being hit. “All it takes is for one store that made a mistake to start deep discounting,” says Gray, “and then everyone has to do something.”