HoHoHo.com…

source: eHow

As Columbus Day heaves onto the horizon, it’s time to steel ourselves for the appearance of Christmas decorations– and displays and promotions– in retail establishments of every stripe.  For each of the last several seasons, the tinsel has come out earlier.  Last year, it was interspersed in some emporia with Halloween frights; this year, we’d best be prepared to see it even earlier…

A Christmas Peril

Even before the Downturn, retailers were working harder and harder to squeeze growth out of the Christmas Season (famously, the period during which many see up to 40% and their sales and as much as 75% of their profits); competition and online-enhanced transparency were taking their tolls.  But with the added pressures of a recession– one in which there’s been a tremendous contraction of the credit that funded both merchants’ stocks and shoppers’ purchases– the game has gotten much tougher still.

Factor in the prospect that the current stock market recovery (and accompanying lift in confidence) is a “suckers’ rally,” and/or that swine flu will take a heavy toll (on the economy, if not lives), and/or that the weather won’t cooperate…  it’s not a pretty picture.  Indeed, Grant Thornton’s Reviving Retail (PDF) report suggests that as many as 10,000 (more) retail stores could close across the U.S. by the end of 2009.

But even assuming that these dangerous dynamics don’t break bad, there’s another challenge to navigate, one that’s already baked into the Christmas Season as a kind of dilemma:

On the one hand… Retailers have, understandably, been reducing their inventory levels.  While there are some signs that confidence may be returning, and thus, that orders may pick up for/in the Dec quarter, the base on which those additions would be made is quite low.  And the conventional wisdom in the investment community (c.f., e.g., here) remains adamant that low inventories are the way to go.

On the other hand… We consumers have been “trained,” over the last 15 years or so, to wait later and later to make our Christmas purchases.  Repeated assurances from retailers that we can “order as late as December 23 for guaranteed Christmas delivery!”, coupled with the sense that, in a growing number of categories, that waiting means lower prices (as retailers begin discounting before Christmas to make their December quarter targets) adds up to an environment in which the cagey shopper waits until the last minute to fill Santa’s sack.

Those cagey shoppers already suffered a fair amount a frantic substitution, as “last minute” meant “out of stock.”  But this year, when it’s likely that there’ll be more shoppers trying to be cagey (or, under financial strain, sacrificing their commitments to frugality only late in the season), that seems likely to be a much bigger issue.

Exactly what all this will mean, of course, remains to be seen; we’ll only know how well inventories match up to demand, and how consumers react to the experience, after the fact…  And that “fact” is likely to emerge very, very late in the season.

The Ghost of Christmas Yet to Come…

But beyond observing that the wise shopper might get his/her purchasing out of the way rather earlier this year , there is perhaps one confident conclusion we can draw:  this should be a good Christmas for online retailing (at least relatively).  Shopping for bargains in an environment of scarcity requires just the sort of ubiquitous access and transparency that on-line provides.

And if either H1N1 or horrible weather do materialize, shoppers are even likelier to retreat to their keyboards.

Which is all just to say that, while e-tailing (and what we might call “web-enabled shopping” from more traditional retailers) was already on the rise, the economic crisis and its manifestation in the retail environment seem likely to accelerate the shift.  I can’t imagine a retail landscape without stores– lots of stores– in my lifetime or in my daughter’s; but it seems sure that the center of gravity in retail will shift to the web (and to what the web becomes)… and, thanks to painful realities of post-Bubble life, that it will shift sooner than later.

The Mattress King is Dead!  Long Live TheMattressKing.com!

It’s a challenging prospect, and, I believe, an exciting one…  if only because (barring too much consolidation in the industry) the same dynamics that are creating the pressure on retail– competition and transparency– are likely to make, ironically, for a return to an important old-fashioned principle.  They promise thoroughly to dilute the effectiveness of the merchandising and advertising that is devoted to selling “differences” that don’t exist…  leaving manufacturers, merchants, and marketers only one viable option, selling real value.

And if so, then, as Tiny Tim proclaimed, “God bless us, every one!”