Another Clunker?

When the government's cash-for-clunkers scheme was introduced, optimists claimed it would kick-start auto sales and get the sector moving again. In the end, the program turned out to be an ill-conceived quick fix that borrowed sales from the future and delayed a crucial industry restructuring in an economy that remains mired in a serious downturn.

While efforts to jump start holiday sales through earlier-than-normal promotions, as detailed in the following Dow Jones Newswires Market Talk post, "It’s Beginning To Look A Lot Like Christmas," are not quite the same thing -- to begin with, the government is not yet handing out rebates to tool and toy buyers -- I reckon the bottom-line benefits will be similarly fleeting.

Back when we were much younger, my best friend Rob and I used to do all our Christmas shopping on Dec. 24. We’d go to the mall, shop for three hours or however long it took, then go to the bar for a few drinks. It was a good way to put everything off to the last minute, still get it all done, and, well, have a good excuse for drinking.

I supposed I’ve changed over the years, although I still generally wait until the last minute to do my shopping (being a journalist, I really do need a deadline to get anything done.)  But it seems retailers have changed even more, and every year the holiday push begins just a little earlier.

But this year, it’s totally out of hand. I was in Sears two weeks ago, and they were selling fake trees and those lighted-deer lawn ornaments. Kohl’s and Target have already started selling some holiday merchandise. Wal-Mart, Target and Toys ‘R US are already engaged in price wars over toys.

So it was interesting to hear Black & Decker note that a big part of their improved 3Q earnings outlook came on — you guessed it — earlier than planned promotional sales.

Chairman and Chief Executive Nolan Archibald said the modestly better revenue was largely due to shipping promotional items in its U.S. industrial power-tools and accessories business in the third quarter, not the fourth as had been planned

Might that be merchandise that’s already moving in an attempt to book some holiday sales early? Kind of sounds like it.

But retailers could move Christmas up to July, and they’d still be in for a rough season. Americans may have Financial Crisis Fatigue, but they’re not that dumb. People are still losing their jobs, other people are holding onto theirs but having their wages cut, or their hours cut, and still others are making due with whatever part-time or side jobs they can. This is no time to max out the credit cards.

A survey out this morning from NPD Group found that 30% of consumers plan to spend less this year than last. That’s up from 26% last year, and last year saw the worst holiday sales in 40 years. The amount of people who plan to spend more was constant at 11%, and the percent who expected to spend the same fell to 59% from 63%.

That didn’t stop NPD from somehow trying to spin the data. “That 4% is not as dramatic as it could have been,” the group’s Marshal Cohen said. The group expects retail sales will be up 0.5%-1.5%. That’s more optimistic than the National Retail Federation, which is predicting sales will be down 1%. How NPD gets a rise in sales from those survey results, we’re not exactly sure.

Don’t forget, as John pointed out yesterday, looking at rail traffic, there’s not much going on out there.

“I think consumers will be looking for the right gift, rather than the most extravagant or expensive one.”

Yeah, right. Listen up, folks, the only “right gift” this year is a job.

(Note: To  read NPD's 2008 "Holiday Retail Outlook" survey of consumer spending intentions, click here.)

Comments

[Bartman]

Many of the vacant storefronts in the suburban Chicago area sprouted Halloween costume / decoration stores around Labor Day. Doesn't this end like they all do - the guy with the goalie mask kills everybody at the end?

[Marion Shaw]

Years ago Fairfax Co. Schools in Virginia deleted Christmas and forbade its
celebration in any form. My then junior high daughter was very resentful when
the children were told to bring something in that represented their holiday
celebration but she was told nothing about Christmas was allowed. So, the
grinch got Christmas out of the public schools in many places. From a purely
secular, pragmatic point of view, I thought the policy was insane since the
national retailers relied on the Christmas holiday to survive and prosper.
Now the grinch that wanted to destroy Christmas from our national public
schools should be very happy this year, for retail is going down the empty
hole of excessively expensive credit; no credit and little money. Wonder what
will be the next driving force that keeps American retail alive which the public
schools will eliminate in the name of freedom for all?

[roger]

Since the mid 1850's there have been 32 recession/depressions.
The steam engine,the railroad,ww2 and the automobile where the
most important investment that generated prosperity & growth.
To day the real economy of production as been dismantled &
replaced by a financial economy not connected to production,
for a society, that,is a dead end,cash for clunkers? ha ha.
no Xmas this year,,, good riddance,solstice was celebrated way
before the Christians stole it.