For the last decade, during the longest period of economic
expansion in American history, the mantra of consumers has been: "Shop
'til you drop." Now, with a new reality setting in, the question is
echoing from Wall Street to Main Street to Madison Avenue: if consumers
stop shopping, how many retailers, marketers and agencies will be
dropping?
That question becomes more pointed at this point in time, during the
holiday shopping season, traditionally the busiest weeks of the year for
commerce in an already commerce-centric nation. The day after
Thanksgiving, Friday 23 November, was what is known as Black Friday, the
start of the make-or-break period for retail chains and, by proxy, the
consumer product companies that supply the goods being sold.
Unlike the occasional "black" day in the stock market, where the dark
colour represents the dark mood after shares plunge in value, black here
is a harbinger of bright tidings. It represents the black ink that
begins to flow for merchants as they rack up profits, meant to
compensate for whatever sub-par results they endured earlier on.
This time, holiday shoppers must do yeoman duty for retailers to salvage
what has been a dreadful year. The economy began to soften in the spring
with the dotcom decline and was already weakened before the blow from
the the awful events of 11 September. The only way consumers are being
wooed into opening their wallets is by offering discounts, coupons,
deals and incentives such as no-interest loans from the major
auto-makers.
That's holding true for the holidays, too, much to the dismay of the
retail giants, which find themselves required to stimulate demand at the
only time of year they usually don't need to. The result has been an
orgy of promotional activity even before Black Friday, with bargains
galore at retailers on what you call the high street and at what we call
the high end, such as Barneys, Bergdorf Goodman, Henri Bendel, Saks
Fifth Avenue and Neiman Marcus.
Further down the retail food chain, the specials are unprecedented. For
instance, newspaper readers were greeted on Thanksgiving by ads from
Macy's department stores featuring coupons for $10 off almost
anything bought early on Black Friday or the day after (a day which
doesn't have a nickname, though after this season perhaps it will be
designated Suicide Saturday).
The purpose of the coup-on was pointedly explained: "It's our gift to
you - use your free $10 to jump-start your holiday shopping
throughout the store!"
By comparison, the Target discount chain, which has been enjoying
stellar success as consumers watch their spending, was running coupons
in its Thanksgiving ads for a free cup of coffee, "small size, day after
Thanksgiving only".
If sales are the only method of getting shoppers to drop dollars, that
means there will be less spending on the high-minded image and
brand-building campaigns that were once sufficient before Christmas -
and more spending on price-and-item ads in newspapers, direct mail and
circulars. The former are usually created for retailers by outside ad
agencies, the latter by in-house shops. The result is lumps of coal in
the stockings of the Madison Avenue mainstays at a time they can least
afford to lose revenue.
For 2001, it seems the only miracle on 34th Street will be a sweater
sold at full price.
