Big Picture: Using the Recession to Sharpen Strategies
It took the National Bureau of Economic Research (NBER) this long to finally confirm what retailers have long known: the U.S. economy entered a recession at the end of 2007. We can only hope that the damn thing ends long before the NBER “officially” announces it’s over.
Unfortunately, that won’t be anytime soon. Predictions of retail sales for this year don’t look good, especially if we use the 2008 holiday sales trends as a precursor.
Black Friday numbers left little to cheer about, especially as retailers scrambled to unload inventory any way they could, selling off about 20 percent of their holiday inventory before the holidays even hit. That practice fed a vicious cycle of price-point deterioration that weakened many sellers who watched helplessly as their profits also eroded. That has led to deflation, which is now impacting the entire CE supply chain. The effect will be similar to what we saw in the housing market: home prices plummeted, followed by bleak employment numbers and rapidly disappearing consumer confidence. Most of us don’t have to wait for the NBER to tell us when the deflation will officially begin. Its specter already hangs heavy.