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This article was reported by Lauren McKay on November 13, 2009 at:

http://www.destinationcrm.com/Articles/CRM-News/Daily-News/2009-Holiday-Retail-Forecast-%22It's-Going-To-Be-a-Disaster.%22-51570.aspx

"...2009 Holiday Retail Forecast: 'It's Going To Be a Disaster.'

A depressed shopping season may lead to a transformation of consumer behavior -- and the disappearance of several brand-name retailers.

Consumers will be decking the halls with fewer boughs of holly this year -- unless there's a two-for-one special or they can find a 10-percent-off coupon online. In other words, this is going to be a grim holiday retail season, according to several analysts and sales forecasts. C. Britt Beemer, chief executive officer of America's Research Group and author of The Customer Rules, predicts a 1 percent drop in sales compared to last year's holiday season -- Beemer's first negative forecast in 23 years of conducting holiday surveys. 'It's going to be a disaster,' Beemer says.

According to Beemer's research, 35 percent of consumers interviewed plan on giving fewer gifts this year -- and 40 percent plan to spend less overall. Beemer was able to get that 40 percent segment to break out its various rationales for belt-tightening:

- 28 percent are concerned about the economy;

- 22 percent are trying to cut down spending;

- 16 percent have higher credit-card debt;

- 14 percent are impacted by gas and grocery prices; and

- 11 percent are insecure about their jobs.

Beemer says one survey response that surprised him involved the use of gift cards. Last year, about 70 percent of consumers were thinking about purchasing gift cards for family and friends. This year, however, that figure dropped to 40 percent. Beemer says the drop is likely a reflection of shoppers' fear of buying gift cards at stores that might not be existence come springtime. This all began, he says, when Sharper Image declared bankruptcy earlier this year and voided a reported $20 million in outstanding gift cards. What Beemer calls the "Gift Card Effect" will trickle down and make for even poorer results in the early months of 2009, when retailers might traditionally be expected to rely on the use of gift cards to make their margins. The cumulative impact may be severe: "I think you will see a six-point drop in sales for those first three months," Beemer says..."

The fact of the matter is that, while many businesses are depending on these holiday sales to stay afloat, the monetary policies and actions of the federal government (in reaction to the chain-reaction of financial problems which surfaced with the exposure of the sub-prime mortgage schemes) have all but crippled the chances of the so-called "recovery" that's being bantered around by Obama administration officials.

Many folks are realizing that, holiday or not, this is simply not the time to spend money you don't have to.

- Ed Smith, Publisher
The EHS Letter Manual