Poor Economy and Holiday Markdowns

Posted by Shelley Elmblad Nov 16, 2007

Retail analysts and Wharton School scholars both have proclaimed early Christmas sales for everyone! That's because with the economic downturn in the United States, many consumers are either strapped by debt, burdened by energy costs or less confident about future earnings -- or all three. This leads the majority of consumers to spend less or at least to take more time shopping around for the best prices.

When people do not buy, retail inventories pile up and this cost combined with the lack of sales does not make for profits. In response to this situation, the best thing the retail industry can do is to follow Wal-Mart's lead and slash prices by offering holiday sales in hopes of generating profits. I have noticed more free shipping offers from mail order and online retailers as well (great news for someone like me who avoids stepping into a bricks-and-mortar store if at all possible).

Price-slashed Christmas and holiday sales bring in less profit, but price cuts give retailers a chance at some profit at the end of the holiday shopping season.

Sounds kind of dismal, doesn't it? That is not the case for you as the consumer. Watch for great holiday sale prices and for drastic after-holiday clearance prices, and enjoy less expensive holiday giving. And take advantage of lower holiday sale prices by stocking up on items you use or plan to give later in the year. The advice in How to Shop Clearance Sales applies to this frugal shopping strategy, and to get into the nitty-gritty of finding the best holiday sale prices, start keeping a price book now.

Read The Holiday Shopping Outlook: I Saw Mommy Dissing Santa Claus from Knowledge@Warton to learn more about holiday shopping trends.

Knowledge@Wharton is the online free-access business journal published by Wharton University.