3) Retailers are, at least in part, to blame.
By stretching the holiday shopping season forward with displays that effectively bookend the holiday buying season and extend well beyond the two months that are traditionally measured, they are ensuring a holiday spending “slump,” for lack of a better term, because the spending is less concentrated.
This year, for instance, I saw a good deal many more Christmas displays going up before Halloween than I’ve noticed in past years. Now, I’m seeing considerably more discounting online and in the local stores for post-holiday sales than I can recall in years.
It’s entirely possible under the circumstances that consumers may simply be shopping earlier or waiting until after the holidays to catch the real bargains. Depending on how much consumers purchase and when they buy, this could just skew the numbers or remove them from the accounting period all together.
Personally speaking though, I see a backlash building.
Holidays have become overly commercialized “events” that are literally nothing more than an excuse to spend money. Many consumers have not only lost the “spirit” but have turned downright negative towards it all.
Under the circumstances, I can easily envision a return to basics building in the next few years that dramatically reduces retail spending overall, and on a level far more dramatic than most retailers can envision today.
Looking forward, there are clearly going to be ramifications for all of this, and I think the preliminary holiday data is going to work its way through the entire consumer purchasing experience in 2013 on several levels.
Hurt by slower sales this season, retailers are likely going to slow down their ordering. That’s going to reverberate all the way through the purchasing chain. Retailers will be less likely to warehouse materials so the supply chain will be tightened further.
This translates into lower restocking levels and slowing shipment volumes, particularly if next year’s consumer data remains dodgy. It also suggests a corresponding drop in wholesale purchasing activity.
Meanwhile, manufacturers are likely to cut back on production, materials purchases and – you guessed it – labor as a means of compensating. That, in turn, pushes back into raw materials and sub-assembly.
Obviously one data point does not make a trend, but the latest SpendingPulse data calls into question the very notion of a recovery in my mind.
Perhaps I’m just in a curmudgeon-like mood this morning, but I simply cannot see shell-shocked consumers who have endured the fiscal hell of the financial crisis suddenly opening up their wallets and returning to spending levels associated with the “good-old days” no matter what hare brained stimulus schemes Washington comes up with next.
If anything, I think they’ll cut back even further.