So the Christmas retail season was once again a dud…surprise, surprise.
Nevertheless, when it comes to the economists for the National Retail Federation and the Wall Street analysts who follow the retail sector, it seems that hope springs eternal.
The barbaric Black Friday frenzies are expected to somehow translate into a consistent shopping pattern for the ensuing month, and everyone is very surprised when it doesn’t happen.
The reality that 48 million Americans are on food stamps, 100 million working-age U.S. citizens do not have a job, and that one-out-of-every-four Americans that do have a job earns less than $10/hr could all be mitigating factors.
In spite of this, optimism still abounds for the after-Christmas/New Year’s sales. Therefore, I suggest the retailers change the way they think about their holiday sales.
Rather than focusing on margins or profits, the emphasis should be on the technique of moving the merchandise.
As an example, The Gap gave 60% off any website purchase and an extra 30% discount for a day-after-Christmas buy. Do the math, for a $100 item ($100 - $60 = $40) with an additional 30% discount ($40 - $12 = $28), it equates to a whopping $72 in savings.
It’s very difficult for me to believe that Gap still makes a profit with a 72% discount.
More than likely, the retail analysts would say the day is a loss leader for future shopping. In other words, the retailer is more than willing to take the loss in order to generate internet traffic and create store familiarity.
If that’s the case, why not just go all the way starting on Thanksgiving? And forget the discount; give it all away, 100% free, the whole store, everything. Just imagine the rush that would create.
The video highlights would be awesome; it would be every man or woman for themselves. Then, just envision the newspaper headlines, “Retail Sales Surge 100%,” “Barack Obama Has Done it Again,” “An Economy on a Roll.”
Add in this year’s estimated holiday gift returns of 37%, or $63 billion (bringing even more customers to the malls), and you suddenly have a holiday season really worth talking about.
A so-called surge in retail sales would light a fuse under that company’s stock until the realization that absolutely no money was made, and conceivably, like Bed Bath & Beyond and Circuit City, more retailers would be forced to permanently close their doors.
If the noise, however, is loud enough perhaps all those retailers with no profits could apply to the Obama administration for a bailout, just like the troubled banks.
Along with his 40-years of dedication in the financial services industry, Bill is the President and CEO of GPSforLife, has recently authored a highly successful book entitled 44th: A Presidential Conspiracy, publishes his dynamic monthly financial newsletter MacroProfit, and faithfully continues his third decade on the radio with It’s All About Money, which can be heard weekdays on Money Radio in Phoenix and in podcast form on his website (and on smartphone apps) published at billtatro.com weekdays at 5pm Eastern. Bill can be reached via email at firstname.lastname@example.org and on Twitter @tatroshow.