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Back-to-school sales lag, a bad sign for holiday season
A Target customer shops for back to school supplies in Daly City, California.
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Steve Chiotakis: Sales at retail stores across the country were flat last month. The Commerce Department this morning said there was
only tepid response to big back-to-school sales and bargains. Retailers look at those
numbers to get an idea about what to expect in terms of holiday sales.
Chris Christopher is senior principal economist at IHS Global Insight. He's with us live from Massachusetts this morning. Hi Chris.
Chris Christopher: Hi, how are you?
Chiotakis: I'm doing well. I thought back-to-school sales were big money makers for the retailers, what's going on?
Christopher: It is the second most important season in the year -- after the holiday season. However, this year, back-to-school sales don't look so good. It'll be above water -- you know, in positive territory -- but not as strong as last year.
Chiotakis: What does that say about the broader economy? Is this just one more sign that the recovery's stalled out?
Christopher: Yes. The probability of another recession is extremely high. And looking at how consumers are behaving, which form about 70 percent of all spending hte economy, things look very, very flat. At least they're not going in negative territory. And if people are not spending for back-to-school, it sort of indicating to retailers that the holiday season will not be very robust.
Chiotakis: So this is a glimpse into the holiday season, right? This is what they're looking at?
Christopher: Yes, and retailers are also looking at it as well. They're saying, "Hey, how are people behaving? How do my cash registers look?" And then they'll plan for the holiday season. So they might not accumulate too much inventory.
Chiotakis: What are the biggest consequences? Are we talking bigger discounts? Store closings?
Christopher: Well yes, if retailers can't make it through the holiday season there'll be store closings or some retail chain stores will cut back on their number of locations. If there's excess inventory, they might do some price discounting. Last year, they did a lot of price discounting -- even before Black Friday.
Chiotakis: Chris Christopher from IHS Global Insight. Chris, thanks.
Christopher: Thank you.
Oh, by the way, I just read the article and yes, there WILL BE STORE CLOSINGS next year, get used to it everyone. Inventories of your favorite goodies will also be limited, get used to that too. Basically, less choice, probably higher prices for some items in demand too. Those that have higher earnings will be targeted for the squeeze while those barely afloat will not even be counted. We are all headed towards having a Charlie Brown Christmas, ahh, those were the good ol days.....
This should not come as a surprise to anyone. Christmas sales this year will be flat as well. If retail wants to keep afloat and ahead of the game then they should start early (shopping hype) and advertise lots of sales coming down the way for holiday sales, and I mean early like RIGHT NOW! if they try to cram everything the day after Thanksgiving then they will be sorry.....Well, like I said, sales will be flat anyway. So, everyone relax and understand that we will have to do without as much as we once thought we had. BEWARE! Do not let what is left in terms of exports to go overseas, do not let business run as usual.
