Shopper traffic is holding, but there are so many deals...

There have been a couple of themes for reporting of Holiday retail sales this year that warrant some clarification. nbsp;At the start of the season, one camp was reporting survey results suggesting shoppers would spend as much or even more than last year.  More recently there has been speculation of consumer retreat and empty malls. 

Neither are quite right.  The surveys occur every year and I generally dismiss them.  Often sponsored by credit card companies or industry associations, there is a media drive behind these that seem to be more concerned with generating shopping momentum than research rigour. There is no logical reason to think people would spend more this year and ... the aren't.

However, traffic is normal (notwithstanding Ottawa's latest snowstorm coupled with a transit strike, and other exceptions).  The critical point is that enough key retailers in certain categories got panicky about holding too much stock after Boxing Week.  Shoppers saw more deep discounts, more often, and much earlier than usual.  

The result is a trained shopper who will gladly wait for great deals while filling a pretty generous Holiday list - and saving money.  Advertised deals of 40%, 50% and even 60% on everything store set the tone in November.  And now we are less likely to see shoppers wait for Boxing Day when Boxing Day type prices are here now.  This in turn should dampen the desire for gift cards, not because there are fears of bankruptcy, but because there is no need to give a store of value that can be levered deeply once the sales start.  The big sales have started.

Consumer confidence will hold up for a while, but there will be a taking stock in the New Year.  A 2009 prognosis for shoppers and retailers will be dealt with in a subsequent blog.