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It’s True—Christmas Will Come December 25 As Always


Here’s my contrarian view of the holiday season—though sales will be soft, profits could be surprisingly resilient. A news release from Customer Growth Partners (CGP) of New Canaan, Conn., prompted my guarded optimism. According to Craig Johnson, president, CGP, the severe drop in gasoline and home heating oil prices will infuse shoppers with dollars to spend on presents. “Christmas will still come Dec. 25,” noted Johnson, despite the worst “economic hurricane” of the last quarter-century.

He’s right, you know. Every calendar has a Dec. 25, and lots of calendars also make note of Hannukah (Dec. 22-29), Kwanzaa (Dec. 26-Jan. 1), and Al-Hijra Muharram (Dec. 29-Jan. 26), though the Islamic New Year commemoration is meant to be celebrated in a less robust fashion than the other holidays. There are lots of gift-giving opportunities, assuming consumers have money to spend.

That’s a questionable assumption, given that October’s unemployment rate of 6.5% was the highest since March 1994, and retail sales for October were the worst for that month since 1969. Let’s also not forget the housing crisis, the credit-market crunch and the stock-market plunge.

But Johnson thinks consumers will have money to spend, though he’s cautious about just how much and where they will spend it. Using the experience of 2005 as a guide, he reasoned that lower energy expenses could mean a sales gain of as much as 2.3% vs. revised base expectations of 0.5% growth. “The late-year decline in 2005 energy prices helped boost 2005 holiday sales growth to a robust 6.2%, vs. wide predictions of 2% to 4% growth,” said Johnson. He also believes this will be a “Wal-Mart Christmas.” Value retailers will prevail.

It’s on the profit line that I believe the real December surprise could show up. With tightened inventories and strict labor scheduling, retailers that don’t panic their way into senseless giveaways could wind up with decent profits. It’s happened before when sales were soft but prudent planning prevailed.

Retailers need to inform shoppers—particularly their best customers—that if they see something they like they better snatch it up because stock won’t be replenished. In this game of chicken, let the customer blink first.

There will be, of course, many merchants that promote like a drowning person flailing arms about in a desperate attempt to stay afloat. Many stores, like Mervyns and Linens ’n Things, already are going out of business. It won’t be easy resisting the urge to join the promotional fray. But if they do, and if they can confine their sales frenzy to predetermined promotions, better-than-expected profits may save their seasons.

Even with a December surprise, the 2009 outlook is grim. Factors aren’t advancing monies to fund spring inventories. Once holiday sales are extracted from consumers, many will go dormant again. Dollars for development have dried up.

Into this cauldron, Chain Store Age and our partner David N. Deutsch & Co. hope to offer some relief. Our third annual Main & Wall conference, March 4-5 at the Harmonie Club in New York City, will review the capital markets as they relate to merger and acquisitions; how to manage in tough times; where to look for and obtain needed financing; how to grow in a slow-growth economy; how technology can help you compete; real estate options; private-label strategies and, for those who so desire, how to properly plan an exit strategy. For more information on the conference, visit .

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