The best news we could have hoped for… isn’t coming. Even a record-setting Cyber Monday isn’t going to save this Christmas from the recessionary Grinch.
According to ShopperTrak, retail sales over the weekend came in at $16.4 billion. That’s 7.3% higher than last year and a pace more than double the 3.6% growth in total holiday sales expected by most analysts on Wall Street.
Is this weekend an indication of how much spending is going to be done this holiday season?
Not a chance. It never is. And this weekend’s sales numbers were artificially inflated. Today’s news is going to be the last bit of good news from the retail sector and the retail sector party the U.S. economy is pinning its last hopes on, is going to be quickly coming to an end. It’s all part of what I like to call “retail deflation.”
Retail deflation is a problem retailers haven’t faced since 2001. Following the tech bubble meltdown, retailers feared stock market declines and losses of paper wealth were going to cause a serious drop in consumer spending. The end result was quite a bit of competition from retailers for every consumer dollar.
Throughout every mall, big-box store and discount retailer, we saw each of them get more and more nervous with each low-traffic, low-sales day that passed. And when retailers get nervous, they cut prices. They’ve got to move their inventory. If it’s not moving fast enough, they’ll cut prices again.
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