Archstone Consulting's research is predicting this holiday season will be more "Bah humbug" than "Deck the Halls" thanks to the global economic downturn this year.
"They have that term 'Blue Christmas,' right? It'll be the toughest Christmas, we say, since 2001 and maybe even before that, since the '90s recession. We're looking at a .5 percent to 1 percent increase in sales," says Michael Unger, a principal at the firm who led this year's holiday-related retail research. In fact, he adds, when one factors in inflation, retailers could actually see a contraction during what's traditionally the best time of the year.
Unger says Archstone looks at a number of factors when determining how the holiday season will shape up, including disposable income and unemployment. But this year, there's the added factor of the financial markets.
"I don't know that everyone understands how [the financial crisis] impacts them, but it doesn't matter. There's a mental weight on people's heads," Unger says.
Archstone also looked into gift card trends. This year, Unger predicts, consumers will likely purchase more practical gift cards, such as those for restaurants. "A family dinner used to be something you didn't think twice about, and now it's more of a luxury item for some families," he says. Overall gift card sales, though, will likely suffer, Unger says. With no discounting, they aren't as attractive as more economical gifts, and, since the cards are so ubiquitous, there isn't much room for growth anyway.
Plus, Unger cautions against buying cards from stores that might not exist when the recipient is ready to redeem. "There could be a lot of bankruptcies following this holiday season," he says. "I would advise that people don't purchase gift cards from companies that could be on the brink."
Weak retail sales will likely carry at least into early 2009, Unger added.
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