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Desperate retailers seek holiday season rescue
This holiday season should prove especially interesting for astronomy
vendors and suppliers. I wonder if we will see some companies close and mergers occur next year after the holiday numbers are tallied? TMT Desperate retailers seek holiday season rescue by Rob Lever Rob Lever Sat Nov 21, 11:32 pm ET WASHINGTON (AFP) – US retailers are taking desperate measures to spark holiday sales in the face of what promises to be another troubled year- end shopping season. Merchants are furiously working to ramp up consumer interest ahead of "Black Friday," on November 27, the day after the Thanksgiving Day holiday that marks the traditional kickoff of the holiday gift season. Some are promising price cuts of 50 percent or more on some hot electronics, and planning for big events to bring out shoppers for big sales promotions. Analysts say retailers are struggling to find the right balance of inventories and discounts while cautious consumers are hesitating about how much and when to buy. Clothing retailer Gap has started early with 25 percent discounts, while Wal-Mart and Target are offering online shoppers free or discounted shipping on many items. JC Penney is boosting Black Friday promotions and will open its doors at 4 am for the best deals. Steven Dennis, executive-in-residence at Southern Methodist University's JC Penney Center for Retail Excellence, said price cuts may be deep but are not as broad as some might expect. "I think most retailers are desperate for market share," he said. "Everyone seems to have the view that business is gong to be flat and it is a battle for market share." But Dennis said retailers are not in the dire position of last year, when they had large amounts of inventory. So price cuts will mainly be on a few high-profile items to get consumers into the store "and hope they get a disproportionate share of their spending." "I don't think deals will be so widespread." Dennis said that with retailers focused on lean inventories, most will be able to post profits even if sales are lower than in 2008. Diane Swonk, chief economist at Mesirow Financial, said she sees overall holiday retail sales growing 1.6 percent from last year, but that this will essentially be flat when adjusted for inflation. "The quality of spending this holiday season will still be dismal, however, when compared to Christmases past," she said. Swonk said retailers who don't join the heavy discounting "might be disappointed with the results." "Consumers were already playing chicken with retailers to get better discounting ahead of the recession and there is no reason to believe they won't be even more cautious about paying full price now, given the sorry state of their balance sheets." Scott Hoyt at Moody's Economy.com agrees the outlook is grim, with unemployment running above 10 percent. Retail spending "will look good compared with last year, but poor by any other standard," Hoyt said. "Though it will be the first nonrecession holiday shopping season in three years, 2009 will again be trying for retailers," he added. "In an effort to reduce discounting, retailers have cut inventories to well below year-ago levels and are expected to keep them low through the holiday season. If merchants have underestimated demand, they could end up with bare shelves, losing sales." Jon Ogg at 24/7 Wall Street said retailers are anxious ahead of Black Friday -- which by tradition is the day in which merchants swing from the red into profit for the first time in the year. "This is the day that retailers look forward to all year and critically depend upon as an anchor to how each retailer's full year earnings results turn out," he said. "What is amazing is just how much of the deal-making is already out before the holiday season starts as retailers key off of each other. It is almost impossible to avoid thinking how such a promotional Christmas and holiday season in 2009 is going to add pressure to margins at almost all of the first-line retailers." A survey by Visa USA found consumers plan on spending 161 dollars less on holiday shopping than last year and 368 dollars less than they planned two years ago. In one sign of the times, several retailers have brought back the layaway plan, which enables customers to put down a deposit to hold merchandise until the full amount can be paid. Sears, Kmart and Toys R US are among those offering the plan, and a new online version of the program is offered through eLayaway.com. One reason for this is that consumers are stretched and may have less acess to credit. A survey for the National Retail Federation found 24.9 percent of holiday shoppers will pay for gifts this year with cash, up from last year?s 22.8 percent. Also, 42.5 percent of shoppers plan to pay primarily with debit or check cards and those using credit cards is expected to fall 10.1 percent. "With many holiday shoppers focused on spending within their limits, it's no surprise that fewer people will be relying on credit cards this year," said Tracy Mullin, the NRF's president and chief executive. |
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Desperate retailers seek holiday season rescue
On Sun, 22 Nov 2009 07:34:38 -0800 (PST), Too_Many_Tools
wrote: This holiday season should prove especially interesting for astronomy vendors and suppliers. I wonder if we will see some companies close and mergers occur next year after the holiday numbers are tallied? I find it interesting that quite a lot of small businesses (which includes most astronomy vendors and manufacturers) are actually doing reasonably well in this economy. Not generally peak business, but very sustainable. IMO, that is because small business can respond faster to change, can successfully scale down when necessary, and often operates with a more realistic economic model. The big companies described in the attached story are the ones that don't have a sustainable business model. They are too big, too unwieldy, and too badly managed. They are too dependent on producing short term returns for their investors. Even a few percent drop in sales is enough to drastically affect them. _________________________________________________ Chris L Peterson Cloudbait Observatory http://www.cloudbait.com |
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Desperate retailers seek holiday season rescue
On Nov 22, 10:30*am, Chris L Peterson wrote:
On Sun, 22 Nov 2009 07:34:38 -0800 (PST), Too_Many_Tools wrote: This holiday season should prove especially interesting for astronomy vendors and suppliers. I wonder if we will see some companies close and mergers occur next year after the holiday numbers are tallied? I find it interesting that quite a lot of small businesses (which includes most astronomy vendors and manufacturers) are actually doing reasonably well in this economy. Not generally peak business, but very sustainable. IMO, that is because small business can respond faster to change, can successfully scale down when necessary, and often operates with a more realistic economic model. The big companies described in the attached story are the ones that don't have a sustainable business model. They are too big, too unwieldy, and too badly managed. They are too dependent on producing short term returns for their investors. Even a few percent drop in sales is enough to drastically affect them. _________________________________________________ Chris L Peterson Cloudbait Observatoryhttp://www.cloudbait.com Interesting comments Chris. Do you have some stats that show this? I have not looked but the concept makes sense. I do expect a significant number of closures in the first quarter of next year since I do not expect the holiday season to do well...my guess worse than last year. TMT |
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Desperate retailers seek holiday season rescue
On Sun, 22 Nov 2009 10:27:13 -0800 (PST), Too_Many_Tools
wrote: Interesting comments Chris. Do you have some stats that show this? No, my observations are largely anectodal. I operate a small business, and I live in an area where most people operate their own businesses, or work for them. While these folks I know have seen things slow down, it isn't resulting in them going out of business. They have adapted. From past posts and general observation, I think the smaller makers of astronomical equipment are managing okay. I don't expect to see many (or any) going out of business soon. It is the distributors, who don't make anything themselves, who are probably most vulnerable. Distribution- especially these days- doesn't add much value for either the manufacturer or the customer; there's not so much money to be made there, the margins are often slim, and the distributor has little control over the product pricing. I wouldn't want to be in that business right now! _________________________________________________ Chris L Peterson Cloudbait Observatory http://www.cloudbait.com |
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Desperate retailers seek holiday season rescue
Chris L Peterson:
From past posts and general observation, I think the smaller makers of astronomical equipment are managing okay. I don't expect to see many (or any) going out of business soon. It is the distributors, who don't make anything themselves, who are probably most vulnerable. Distribution- especially these days- doesn't add much value for either the manufacturer or the customer; there's not so much money to be made there, the margins are often slim, and the distributor has little control over the product pricing. I wouldn't want to be in that business right now! Especially if you were Company 7. IMO they are a value-added reseller because they don't drop-ship; everything comes to them and they unpack it, test it, collimate if necessary, certify it, and re-pack before it goes to the consumer. That requires skilled labor, and C7 has to try to compete with the drop-shippers on price in a market where many people know the price of everything and the value of nothing. Fortunately, C7 does systems integration for customers with special requirements, and that helps smooth the dips in the retail market -- though the specialty business has its own ups and downs that may parallel those in the consumer market. Disclaimer: Martin Cohen, owner of C7, is a personal friend. What I have written here comes from personal observation. I buy from C7 at their regular prices. Davoud -- I agree with almost everything that you have said and almost everything that you will say in your entire life. usenet *at* davidillig dawt cawm |
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Desperate retailers seek holiday season rescue
On Sun, 22 Nov 2009 18:08:03 -0500, Davoud wrote:
Especially if you were Company 7. IMO they are a value-added reseller because they don't drop-ship; everything comes to them and they unpack it, test it, collimate if necessary, certify it, and re-pack before it goes to the consumer. Exactly. They have found a way to add value that people are willing to pay for. Other distributors have, as well. But I think that most distributors don't operate by that model, and that's going to make things increasingly difficult for them. Company 7 could provide a lesson to many distributors, but I think they will remain more of an exception than the rule. _________________________________________________ Chris L Peterson Cloudbait Observatory http://www.cloudbait.com |
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Desperate retailers seek holiday season rescue
On Nov 22, 4:08*pm, Chris L Peterson wrote:
On Sun, 22 Nov 2009 10:27:13 -0800 (PST), Too_Many_Tools wrote: Interesting comments Chris. Do you have some stats that show this? No, my observations are largely anectodal. I operate a small business, and I live in an area where most people operate their own businesses, or work for them. While these folks I know have seen things slow down, it isn't resulting in them going out of business. They have adapted. From past posts and general observation, I think the smaller makers of astronomical equipment are managing okay. I don't expect to see many (or any) going out of business soon. It is the distributors, who don't make anything themselves, who are probably most vulnerable. Distribution- especially these days- doesn't add much value for either the manufacturer or the customer; there's not so much money to be made there, the margins are often slim, and the distributor has little control over the product pricing. I wouldn't want to be in that business right now! _________________________________________________ Chris L Peterson Cloudbait Observatoryhttp://www.cloudbait.com The reason why I ask about data is that I am seeing the opposite...small stores closing left and right and only large big box stores remaining. Since a large amount of astronomy equipment today is manufactured by only a few companies, most of the names we deal with are distributors..aka retailers. Has anyone seen numbers of how small versus large retailers have done this last year? TMT |
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Desperate retailers seek holiday season rescue
On Mon, 23 Nov 2009 08:22:22 -0800 (PST), Too_Many_Tools
wrote: The reason why I ask about data is that I am seeing the opposite...small stores closing left and right and only large big box stores remaining. I think we're probably looking at different things. The small business people I know are not retailers, but are providers of goods or services. I think those sorts of businesses are much more likely to weather bad economic times than retailers. I predict that most astronomical equipment designers and manufacturers will survive; the thinning is likely to be amongst the distributors. The distributors that will do okay will be those like Davoud identified, which are able to provide some sort of value added service. _________________________________________________ Chris L Peterson Cloudbait Observatory http://www.cloudbait.com |
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Desperate retailers seek holiday season rescue
On Nov 23, 10:32*am, Chris L Peterson wrote:
On Mon, 23 Nov 2009 08:22:22 -0800 (PST), Too_Many_Tools wrote: The reason why I ask about data is that I am seeing the opposite...small stores closing left and right and only large big box stores remaining. I think we're probably looking at different things. The small business people I know are not retailers, but are providers of goods or services. I think those sorts of businesses are much more likely to weather bad economic times than retailers. Yes: retailers have huge fixed expenses (rent) that they have very limited options in cutting. Bad economic times are always very harsh for small businesses in the retail sector. John Savard |
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Desperate retailers seek holiday season rescue
On Nov 22, 5:08*pm, Davoud wrote:
Chris L Peterson: That requires skilled labor, and C7 has to try to compete with the drop-shippers on price in a market where many people know the price of everything and the value of nothing. Davoud This is an extremely important concept and cannot be emphasized enough. There are people who have the necessary skills and time that they can fix QC problems without support. If you've figured enough of your own mirrors it isn't difficult to tell if you have bad optics and that they need to be returned, HOWEVER, and this is a very big qualifier most people buying a "premium" mass produced scope don't have the request skills. These people should be buying from Company-7 or other reputable dealer who can look/test the scope before the consumer gets it. Unfortunately few people understand the price of an item and it value. |
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