Will Christmas 'sticker shock' doom sales?
Shoppers are expecting discounts this holiday, but a weak dollar and leaner inventories will pressure retailers to keep prices high.
It's going to be much harder for stores to pull off a repeat performance this year. The National Retail Federation thinks retailers will only see a 2.8% increase in holiday sales. That could translate into tough times for stocks like Gap (GPS), Macy's (M) and other retailers.
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Shoppers still expect to see big discounts heading into November, but they may be disappointed. Inventories are leaner this year, so stores won't have as many piles of unsold goods waiting for drastic markdowns.
The apparel category could have its own problems. A weak dollar means imported textiles are more expensive, The Conference Board reports. Clothing stores won't be able to discount as much as shoppers might anticipate.
"Will that cause consumers to change their gift lists, or will they buy these gifts despite 'sticker shock'?" asked The Conference Board in a note Monday. "Apparel could be the tipping point."
This coming holiday could be a bigger tipping point for the economy as well. The jobs and unemployment situation has been bleak, and no one is expecting much improvement in demand. A disastrous holiday season could push the economy into a double-dip recession. On the other hand, a surprise to the upside might mean things are finally turning around.
A new report from Accenture says that 88% of shoppers plan to spend the same or less as last year, and 93% say discounts are important this year. Nearly a quarter of shoppers are planning a "thrifty" holiday season.
The focus, then, could turn to wealthy shoppers. They seem to be the only ones with money to spend this holiday. In fact, according to the Accenture study, 71% of shoppers earning more than $100,000 say they will spend at least $500 on gifts this holiday.
That could mean big numbers at high-end retailers like Tiffany (TIF), Coach (COH) and Saks (SKS).
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