As a business owner, there are only two things you pray for. The first is a government mandate that all citizens must purchase your product or face a fine or jail time. Those in the car insurance business are smiling because they know this is so true. The second thing on your prayer list would be some type of national or global holiday that almost compels people like mindless robots to buy your product or service. Many retailers can attest to this during the Christmas season. With that said, there are three reasons why this season many retailers may find themselves in a situation where this coming Black Friday and Cyber Monday might not turn out to be so lucrative.
The first reason this season may be the last for many retailers is the ongoing global recession. This is not to say that people don’t have money because they do. What is happening though is that those with money are now holding on to it tighter than ever before. For the first time ever the national savings rate in America is actually increasing. While this is good news for every financial advisor out there, it spells really bad news for those businesses who rely on a spending bonanza during this time of year. Many of their customers are now spending less luxury items and are investing more in the basics like food, water and shelter.
The second reason for the expected slump in holiday sales this year is the massive layoffs, job cuts and skyrocketing unemployment numbers. If you recall, we stated above that the national savings rate is actually rising for the first time in decades. If this is true then that would mean that prior to this economic downturn, almost no one was saving. What this says is that when you have such widespread unemployment, those who now find themselves unemployed were not saving when they had income. Now that they have no income, they are subsequently struggling to pay the mortgage, put food on the table and keep the light on. Do you really think these are the individuals whom you will see lining up outside the Best Buy stores to load up on the latest electronic device?
The final reason for a slower than expected holiday sales season, is the continual reliance on an old business model. Despite the obvious evidence to support this fact, many retailers are ignoring the internet as a means to generate awareness about their business, increase revenue and decrease expenses. With a traditional retail store, much of your money is tied up in inventory, staff and overhead. Margins are already slim and are getting slimmer by the moment yet many store owners refuse to move toward a more profitable business model. For less than $124 dollars a month, you can take your average retail store and put it totally online thereby reducing the overhead by as much as 57%. If you get rid of the excess inventory and find drop shippers to handle the delivery of your goods, you can shave another 16%.
The time to change and adapt is here and unfortunately many of the well known retailers you’ve come to know and love are about to become extinct. Those who survive will have adopted advanced guerilla marketing strategies that allow them to free the money once tied up in ridiculous overhead expenses so they can capitalize on the segment of the market that is purchasing.
Dorthy T. Weatherbush will be shopping online this Cyber Monday and will be looking for great deals on holiday decorations from Collections Etc. She is hoping to find great deals on table clothes, placemats, Christmas gear, and more at Collections Etc where nothing is more than $14.99!
