Shop Your Way Out of the Crisis
Published in Frankfurter Rundschau
(Germany) on 27 November 2009
by Frank Wadewitz (link to original)
Black Friday, the day after Thanksgiving, is when American stores try to lure in customers with bargains and sales that sometimes last just a few hours. The world is counting on the American consumer’s willingness to spend.
Sleeping bag, emergency rations, first aid kit – many Americans were superbly outfitted when they left home on Friday before the sun was even up. But they weren’t taking part in some NATO maneuver; they were going shopping.
It really is the day of The Big Battle, especially for American retail store chains. Market researchers predict that 134 million customers will flood the stores over the next few days.
Many stores opened their branches as early as 4:00 AM in an attempt to get the upper hand over long waiting lines and the frenzied attacks on flat-screen TVs, video games, and other bargains.
But it isn’t the most important day of the year just for American retailers. Economists and analysts around the globe are keeping close watch on the U.S.A to see whether Americans rediscover their joy of shopping. Recently, these world champion shoppers have been keeping a low profile; more than anything, record unemployment has put a damper on their enthusiasm.
In addition, the average American carries a $5,600 burden in the form of unpaid credit card loans piled up during previous shopping sprees. People are likely to forego that new television set under those circumstances. As a side benefit, however, that debt will help reduce the trade imbalance between the United States and the rest of the world.
On the other hand, the world is hoping for just the opposite in the short term and is praying for a comeback of America’s consumption madness. If there is no comeback, it will make economic recovery more difficult for everyone else. Consumption accounts for about 70 percent of the U.S. economy.
Americans import consumer goods from around the world on a scale that dwarfs everyone else. This sudden American frugality can already be felt around the globe: if a family in California puts off buying a new television set, jobs are lost in North Malaysia, so there is a lot riding on holiday shopping between New York and Los Angeles.
The prognosis thus far has been anything but clear. According to surveys, Americans are saying they intend to spend less than they did in 2008 when the crisis began. Several institutions, on the other hand, reckon there will be a slight uptick in sales. We won’t know until all the data has been collected.
Anthony L. Liuzzo of Wilkes University says, “Many retailers may have actually underestimated consumer demand this year and won’t have enough goods on hand; that’s why the battle of the discounts on Black Friday won’t carry over into December as it did last year.” Liuzzo calculates that holiday sales will nonetheless grow by some 1.8 percent this year compared to last year when they actually decreased. He also believes that by mid-year 2010 at the latest, consumption will again be driving the economy as usual.
If stores experience lower sales than hoped for this year, it won’t be because of reduced advertising. J.C. Penny and Wal-Mart have been bombarding potential customers for days with ads, television spots and direct telephone marketing.
This year, even Twitter and Facebook are being used to hawk bargains. Hundreds of websites display affordable goods. Television sets, toys and clothing have replaced subjects like the war in Afghanistan and health care reform in the headlines; this week, there’s nothing more important in America.
Nikki Baird of the Forrester market research company says, “Hype can even seduce bargain hunters into spending; nobody wants to pass up a good deal.”
Sleeping bag, emergency rations, first aid kit – many Americans were superbly outfitted when they left home on Friday before the sun was even up. But they weren’t taking part in some NATO maneuver; they were going shopping.
It really is the day of The Big Battle, especially for American retail store chains. Market researchers predict that 134 million customers will flood the stores over the next few days.
Many stores opened their branches as early as 4:00 AM in an attempt to get the upper hand over long waiting lines and the frenzied attacks on flat-screen TVs, video games, and other bargains.
But it isn’t the most important day of the year just for American retailers. Economists and analysts around the globe are keeping close watch on the U.S.A to see whether Americans rediscover their joy of shopping. Recently, these world champion shoppers have been keeping a low profile; more than anything, record unemployment has put a damper on their enthusiasm.
In addition, the average American carries a $5,600 burden in the form of unpaid credit card loans piled up during previous shopping sprees. People are likely to forego that new television set under those circumstances. As a side benefit, however, that debt will help reduce the trade imbalance between the United States and the rest of the world.
On the other hand, the world is hoping for just the opposite in the short term and is praying for a comeback of America’s consumption madness. If there is no comeback, it will make economic recovery more difficult for everyone else. Consumption accounts for about 70 percent of the U.S. economy.
Americans import consumer goods from around the world on a scale that dwarfs everyone else. This sudden American frugality can already be felt around the globe: if a family in California puts off buying a new television set, jobs are lost in North Malaysia, so there is a lot riding on holiday shopping between New York and Los Angeles.
The prognosis thus far has been anything but clear. According to surveys, Americans are saying they intend to spend less than they did in 2008 when the crisis began. Several institutions, on the other hand, reckon there will be a slight uptick in sales. We won’t know until all the data has been collected.
Anthony L. Liuzzo of Wilkes University says, “Many retailers may have actually underestimated consumer demand this year and won’t have enough goods on hand; that’s why the battle of the discounts on Black Friday won’t carry over into December as it did last year.” Liuzzo calculates that holiday sales will nonetheless grow by some 1.8 percent this year compared to last year when they actually decreased. He also believes that by mid-year 2010 at the latest, consumption will again be driving the economy as usual.
If stores experience lower sales than hoped for this year, it won’t be because of reduced advertising. J.C. Penny and Wal-Mart have been bombarding potential customers for days with ads, television spots and direct telephone marketing.
This year, even Twitter and Facebook are being used to hawk bargains. Hundreds of websites display affordable goods. Television sets, toys and clothing have replaced subjects like the war in Afghanistan and health care reform in the headlines; this week, there’s nothing more important in America.
Nikki Baird of the Forrester market research company says, “Hype can even seduce bargain hunters into spending; nobody wants to pass up a good deal.”