Real Wealth Society

Wednesday, November 29, 2006

I’ve been thinking about shopping By Fred Cederholm

Nov 26th, 2006

I’ve been thinking about shopping. Actually I’ve been thinking about Christmas, “black Friday,” consumers, incentives, plastic money, January, and the Middle East. We have now entered the holiday shopping season of 2006 in earnest. While last week (particularly the Friday after Thanksgiving) has traditionally kicked off the selling of Christmas merchandise and gifts, the marketing of sales, discounts, and the full color newspaper inserts began much earlier this year.
You see, shopping is when we make a trip somewhere to get something we want (or maybe something we might really need). The marketing of Christmas decorations and gifts is a big deal for retailers and the entire US economy for that matter (on second thought, make that the World economy). Somewhere between 40% and 60% of THE YEAR’S sales are made during pre-Christmas, Christmas, and post-Christmas “sell-athons.” It is a make it (or break it) time for a lot of merchants/ manufacturers. If they don’t entice US/us consumers to buy now, it could impact their bottom line for the entire year.
This ritual truly began the day after Thanksgiving – which appropriately has been dubbed “Black Friday.” The use of the color “black” covers both potential outcomes. If sale’s numbers are great, the merchants should make lots of money, and their year-end financial statements will be in the black – as opposed to losses which would appear as red as Rudolph’s nose. If sale’s numbers are poor, the merchants will sink into the deep funk of mourning – hence the color black is appropriate as well.

While the numbers from the past weekend are not yet official, there is least the appearance that the 2006 shopping season is off to a robust start. One preliminary report states how the average shopper spent over $350 on Friday alone! The parking lots were overflowing, the shops – particularly the “big box” stores – were crammed with people, and the carts at the checkouts were filled to capacity. In many cases the lines began forming outside well before dawn, and the stores began the ritual of their “Black Friday” selling at the earliest opening hours ever. Two years ago the big incentive was to get a $30 CD player, last year the incentive was to get a $300 laptop, and this year the incentive was to get the current “state of the art” video game machine - at any price!

From the sellers’ side the volume of the sales is already being hyped, but it is the mark-up – the amount of actual profit- made from the units’ sales that puts the “black” in “Black Friday” (and the entire Christmas selling season for that matter). I can’t remember a recent year when I recalled more special sales of stuff this early in the season, or for the huge double-digit discounts being offered. The papers have been filled with ads and full color inserts to inform (and to tempt) shoppers. This is really a good thing because informed consumers make the best shoppers. While these sales are great for the buyers, how heavily will the deep-discount pricing impact the bottom lines of the merchants in the final analysis when the frenzy subsides? “So what?” The shoppers might think, “That’s not my problem!”

It is joking said that “when the going gets tough, the tough go shopping.” While the Christmas season of 2006 is shaping up to be a bonanza for shoppers, there is a potential dark side lurking on the horizon for the shoppers/ consumers as well. Here the issue becomes how purchases are consummated at the registers. Were the goodies actually “bought,” or were they “financed?” Did the shoppers pay with dollars, checks, or plastic? This is a critical issue because in so many households the brightest joys of gift giving can transform into the darkest funk of January when credit card statements become due. My holiday warning (as Fred, the un-official forensic accountant “Grinch”) to all you Mall Rambos is: “Beware the Ides of January.” Keeping this in mind as you, the most zealous of shoppers, navigate these ever-so-tempting holiday sales could save a lot of grief and financial pain come the New Year.
It was noted above how “shopping is when we make a trip somewhere to get something we want (or maybe something we might really need).” Last week, Vice President Cheney made a “shopping trip” to Saudi Arabia. This week Pope Benedict will make a “shopping trip” to Turkey, James Baker will be making several “shopping trips,” and President Bush will make a “shopping trip” to the NATO Headquarters and to Jordan. They aren’t seeking a bargain CD player, a bargain laptop, or the current “state of the art” video game machine at any price. They are shopping for something far more precious. They are shopping for a resolution/end to the violence, to the killing, to the destruction, and to the underlying hatred dominant in the Middle East. That would be the ultimate gift to us all in the real spirit of Christmas, wouldn’t it? I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.
Copyright 2005 Questions, Inc. All rights reserved.


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