US holiday shopping

One of the dark arts of consumer marketing involves creating ritual where once there was none. Hence the proliferation of fish weeks, heritage months, or special days for dads and secretaries. This weekend in the US features the now traditional "Black Friday", when stores open before dawn to welcome shoppers as soon as Thanksgiving is over, combined with an advertising blitz in the attempt to win market share.

Yet while it sounds the starting gun for the real holiday shopping season, the weekend has remarkably little predictive power. The Saturday before Christmas is a busier day for retailers, and it will anyway be too early to discern spending patterns. Bargains should lure in customers, but the danger is that these are not discretionary purchases. For items long scribbled on shopping lists, discounts simply represent lost margins for the stores. In fact, with sales already under way at many clothing and electronics retailers, the only useful sign to emerge might be the worst case one – that consumers are becoming insensitive to lower prices.

If so, particularly tough times for retailers lie ahead. Holiday retail sales – those made in November and December, and excluding cars, petrol and restaurants – have not fallen year-on-year for at least 22 years. The worst was a rise of 0.7 per cent in 2002, according to Citigroup, which expects growth of between 0 and 1 per cent this year.

Even that may be optimistic. It is hard to see where consumers' cash will come from. The savings rate is low. Credit is scarce. Mortgage equity withdrawal, which averaged $150bn a month for the past five years, was just $10bn in each of the first two quarters of 2008, notes Creditsights. Wage growth is running at just 2 per cent, while 1.2m fewer people are employed compared with last December. Consumer confidence has shown its greatest collapse of the post war period. Happy Thanksgiving.

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