’08 Holidays To Be Dismal For Retailers, Jolly For Shoppers

The 2008 holiday season is shaping up to be a bleak one for retailers, but consumers on a tight budget will get more bang for their buck. Straddled with surpluses from lackluster spring and summer seasons, merchants are bracing themselves for “one of the worst selling seasons in years” and being “practically religious” in merchandise planning, WWD reports.

Standard & Poor’s retail equity analyst Marie Driscoll told WWD that it’s seeing a “5 to 10 percent inventory reduction on per-square-foot basis.”

“The consumer, based on the confidence numbers, is much more pessimistic,” she said. “Their income is constrained, and retailers are managing with less inventory investment, trying to mitigate the risk.”

The 2007 holiday shopping season wasn’t exactly a banner year either, though discount retailers performed well, and consumers are expected to be even more cautious come November.

The outlook of the analysts and retailers interviewed ranged from decidedly grim–one anonymous source called the retail climate “one of the worst in 40 years"–to cautious. Henri Bendel’s general merchandise manager described the department store’s approach to buying for the 2008 season as “surgical," and Macy’s chairman Terry Lundgren said he expects there to be “a lot of pent-up demand in the fourth quarter” driving consumers to spend.

Ms. Driscoll said apparel is expected to fare particularly poorly.

On the upside, there will be plenty of bargains unrolled early in the season to woo shoppers. “By this season, many will open before Thanksgiving with Christmas-type promotions early in November, and will be very aggressive with pricing,” Ernst & Young’s director of consumer products, Jay MacIntosh, told WWD. ’08 Holidays To Be Dismal For Retailers, Jolly For Shoppers