Retailers, consumers and prices
(Adds comments from Friday afternoon)
Shoppers thronged stores to pick up discounted flat-screen TVs, electronics and clothes as panicked retailers pull out the stops in what is traditionally the biggest shopping weekend in the United States. Reuters reporters are out in force, gauging consumer sentiment. Here are our favorite quotes so far:
“I’m not going for the Santa Claus award,” said college student Corey Talley, 24, who was shopping at the Mall at Prince George’s in Hyattsville, Maryland, and plans to spend less this year because he bought a four-unit apartment building in a low-income neighborhood in November 2007 and had only one tenant.
Nursing students Williamena Davids, 23, and Vivian Teah, 25, arrived at the mall at 5:12 a.m.
“I thought there was going to be some sales. No luck,” said Davids, who had been working for Geico as a customer service representative but lost her job this year.
Teah said her budget was also pinched: “I have a big family. I have to make sure that everybody gets something. It’s fun (to go shopping). We just wish we had money.”
“I will not go near stores on Black Friday. People are crazy,” said Lori Kirby, who was in Kmart near Manhattan’s Penn Station on Thursday to pick out a last-minute holiday outfit for her aunt. “Unless you get there first, it’s like running with the bulls or something.”
Call it a test of the American consumer’s mettle.
How many will feel confident enough about the economy, and their own future within it, to spend money that is increasingly hard to come by? How many will resist the siren call of steep discounts and sales for even the hottest gadgets, like those available at Apple Inc’s stores?
This Black Friday, such questions are not only central to the future of many of the best known U.S. retailers, but amount to a key indicator of how quickly the country’s consumer-led economy will shrink in the coming months. How deep a recession could it be, how long might it last?
The Paris-based Organization for Economic Cooperation and Development says the U.S. economy has probably slipped into a recession that will last through the middle of 2009.
But forget Paris, you don’t need to look any further than today’s results from apparel retailers for proof that the U.S. economy is in a slide.
This weekend’s finds on a New York City ramble include $5 ladies’ shoes and 24-hour check cashing. With Black Friday fast approaching at the end of this week, the pace of discounts and special offers is definitely picking up.
(Photos: Nick Zieminski for Reuters)
Give the "Glass is Half Full" award to Stan Glasgow, Sony's top U.S. electronics executive, ahead of what could be the most crucial (and potential painful) "Black Friday" shopping weekend in many years. It's normally a happy time of year, filled with family gathering, gifts, etc.
Perhaps, just perhaps, things aren't as bad as they seem, Glasgow told a gathering of journalists on Thursday, suggesting that there are great bargains to be had on cool gadgets and big TVs, if consumers can overcome their apprehension.
Not only are they thinking twice about shopping, consumers are also losing faith in gift cards, according to the America’s Research Group/UBS 2008 Christmas survey.
While such cards were among the top gifts for holiday 2007, consumers this year are worried that stores could slip into bankruptcy and leave gift card recipients out in the cold.
U.S. retailers, some of them on the brink of complete ruin, are already slashing prices ahead of Black Friday next week. We’ll be covering the fallout of the financial crisis and how it is changing the consumer psyche in great detail, both here and on the Reuters Holiday Shopping coverage page. To start off, here are a few images of how “recession” is the new sexy when it comes to luring shoppers, from our reporters in the trenches.
New York City, where the sign says it all, via Nick Zieminski:
It almost looks like the Entire Store is for Free, though that is not the case:
These are from Atlantic City, if anyone is looking for diamonds, via Martinne Geller:
Check out the mixed messages from Home Depot.
The retailer posted better-than-expected quarterly profit. But that was still a 31-percent drop.
The company also said it expected sales to drop more this year than it previously thought.
Home improvement retailers were the leading edge of the retail slump, getting hit by the housing slowdown before the rest of the economy fell into what is likely a recession.
But with rival Lowe’s and now Home Depot both beating expectations, there could be signs of of a turnaround.
“Hardline retail stocks have historically begun their recoveries when expectations begin to be achieved, and this may be happening for Home Depot and Lowe’s,” Credit Suisse analyst Gary Balter said in a research note.
Also in the basket:
Wal-Mart says gas price drop helping store traffic
Saks third-quarter loss wider than expected
Gift card sales seen down 6 percent this holiday
Before the U.S. holiday shopping season even begins, Morgan Stanley's chief U.S. economist has given up on consumer spending -- not only through Christmas '08 but all the way until next summer at the earliest.
"As we see it, the current collapse in consumer spending likely will be the most severe and longest in the postwar (World War Two) period," economist Richard Berner wrote in a note to clients. "The recovery in consumer spending likely will be moderate as consumers embark on a long period of rebuilding thrift.