Why the Grinch Will Steal Christmas for Retailers Part 1

The day after Thanksgiving is dubbed “Black Friday”.  This was traditionally recognized as the time when retailers would begin to go into the black in terms of accounting.  That is begin to be profitable.  And the better the Christmas season would be, the more profitable they would end the year.

Yet the days, when the big box retailers rule the Christmas season will fade away as major changes are on the horizon as shoppers are changing their preferences in shopping.  When I was a kid, one highlight was the arrival of the Sears Christmas Catalog.  My brother and I would spend hours poring through it as we made our “want” lists.  The catalogs would create some mail in ordering, but to send an order that way was risky as you may not receive your gifts by Christmas.  I think catalogs helped drive more people into the stores where they could pick up their merchandise.  Even if you were not a catalog shopper, you would probably be among the massive throng of shoppers rummaging through the local stuff-mart to fill your list.  Usually for me, this begins around December 20th!

But retailer stocks are taking a serious hit.  Sears is down over 35% since the first of the year.  Wal Mart fell 10% last month and others like Macy’s and Neiman Marcus have dropped farther.  Large retailers come and go.  I have seen the likes of Montgomery Ward and Circuit City disappear from their prominence.  Clearly the market does not have the usual rosy outlook for retail sales this time of year that you usually see.  Part is from a change in shopper habits.

Fast forward to today.  Shopper’s preferences in shopping has changed.  One of the beautiful things of the world we live in is that I can sit in my underwear at my computer and compare different items, read customer reviews, see which seller has the best price, and purchase items in the warm comfort of my own home away from the cold weather and insane crowds.  I think there are some days that if I could avoid going to another store and could purchase everything at home, I would.

My kids are all over this trend.  My daughter is always showing me something that she has found on Etsy and purchased most of her gifts last year from that site.  My oldest son talks of a day when you can have an automatic shopping list on your computer and get shipments for grocery, personal maintenance item, and cleaning supplies automatically.  I even have an app that I found where I can take a picture of myself and order a tailored dress shirt!

Services like Amazon and Apple are making a killing in retail as the new wave of retailer.  Imagine what would happen if everyone shopped for Christmas gifts from their home as I have.  Crowds and foot traffic at the stores would disappear in to ghost towns of warehoused merchandise.  This trend of shopping from your home is a new wave that big box retailers have to figure out or suffer the consequences.

Oh there will be some areas where it is harder to buy items from your chair.  I think it will take longer to purchase building supplies or groceries (though some stores are beginning on-line grocery services).  But it will also impact where you buy.  My trips to Wal Mart are a fraction of what they used to be as I will opt for a smaller grocery store or a convenience store for emergency essential items.

I think it will also make going to the store more of a social event than a chore to do.  There will be more leisure in shopping which will usually be accompanied by Starbucks and a nice lunch.  Stores will have to have a product that requires people to go to pick up or they will have to provide an experience where people will want to go to in order to shop.  The last option is they will have to successfully jump on the wave of online sales.

Until the big box retailers figure this out, they could experience the Grinch stealing their expected strong holiday sales.