Whatever your political views may be, it’s hard not to think about the impact of the recent presidential election on the consumer psyche, and ultimately our industry. Whether President Obama or Mitt Romney would have been better for the economy in the long run is an issue I’ll gladly leave to the political experts and historians. But I do think that, in the near term, we are less likely to see the big holiday spending numbers that some analysts were predicting.
Though it may have seemed like it over the past few months, the election isn’t the only issue weighing on the minds of holiday shoppers. With the economic recovery just “limping” along, the recent damage and disruption from Hurricane Sandy, and the onslaught of media stories surrounding the potential for next January’s so-called “fiscal cliff,” it’s hard right now for anyone to see the potential for happy holidays. And, although most people probably don’t even understand what the “fiscal cliff” might mean for their finances and families, the weight of repetitive bad news can inevitably take its toll on consumer confidence.
If the retail behavior of shoppers this holiday season is dragged down — even slightly — by all of this bad news, consumer spending could be curtailed enough to have a measurable impact on holiday sales. This makes me think that the widespread sunny predictions we have seen from some analysts showing holiday spending increases of up to 5% may be a little too robust. I suspect that a safer bet would be to dial back the optimism into the 2% to 4% range. One wildcard which could paradoxically help keep cash registers ringing is the fact that many meteorologists are forecasting a slightly chillier than normal holiday season. An early chill in the air may actually spur some sales, as it tends to get people into the holiday spirit a little earlier than if parts of the country are basking in warmer-than-usual temperatures.
No matter how the holiday shopping season ultimately shakes out, the hype surrounding holiday discounts is already in full force and unlikely to change in any significant way. Similarly, I don’t see 2013 expansion and repositioning plans being dramatically altered at this point either, no matter what happens over the next few weeks. While the holiday shopping season has become an increasingly significant chunk of many retailers’ annual sales, even a somewhat disappointing holiday haul shouldn’t necessarily detract from broader economic trends that continue to slowly but surely move in the right direction.
The bottom line is that my crystal ball remains cloudy beyond the end of the year. Because the 2013 “fiscal cliff” represents such profound uncertainty, I think even the most plugged-in retail analysts would be hard pressed to make an accurate prediction without having a better sense of how that issue will be resolved. And, while consumer sentiment is a very important metric with some very tangible consequences, I don’t think the psychological impact of these outside influences will have any long-term negative impacts on our industry. The best advice I can give to retailers and retail real estate professionals is to keep moving forward. We’ve proven to be resilient before. We can certainly prove it again.
What do you think? Please make a public comment below or feel free to e-mail me privately at firstname.lastname@example.org.
Click here for past columns by Jeff Green.