Amazon Kicks Off the Holiday Season
Have you looked at
) home page lately? The ads rotate often, but somewhere around the
upper right corner of the page, near the ad for the Halloween Shop,
you'll see a new ad. Yep. It's the Holiday Toy List.
Before we've even handed out the fun-size Halloween candy bars, the countdown to the year-end holidays has begun, complete with Daily Lightning Deals on gifts for all ages.
This is not holiday cheer busting out. It's a case of bad nerves.
Some of the concerns over this holiday season date from before the federal government shutdown that ended last week. However, the crisis added to the uncertainty because its resolution actually resolved nothing. Current government spending levels were authorized only until January 15. The agreement to raise the debt ceiling expires on February 7. The slugfest will resume, and soon.
Ebay ( EBAY ) did not mention the government crisis specifically in its quarterly report last week, but the company's generally cautious forecast for the current quarter raised red flags among investors.
The company was looking at trends that are, at least from its viewpoint, bigger and longer-term than a political squabble in Washington: that is, the decelerating rate of growth in online shopping, and a consumer mood that may be improving slowly but is still cautious, and even fragile.
An index of consumer sentiment by Thomson Reuters/University of Michigan dropped to 75.2, its lowest level in nine months, in a preliminary reading released Oct. 11. The report by Reuters concluded that a prolonged shutdown "would exact a toll on consumer spending and the overall economy."
We now have an estimate of the toll to date: $24 billion, or 0.6% of the year's gross domestic product, according to Standard & Poor's Ratings Service. That figure covers non-government business losses and spending interruptions directly attributable to the shutdown.
A retail analyst told the New York Times that the government shutdown "eroded two years of gains in consumer confidence."
That may be why Amazon.com is kicking off its Daily Lightning Deals early. And many other online retailers will be pulling out all the stops, with stepped-up marketing campaigns, more sales, and earlier home-page revamps.
Online and in the real world, the promotions will go into high gear with sales on Thanksgiving Day. The holiday opening was controversial two years ago; somehow it is now an American tradition.
Adding to the general nervousness is an unusually short holiday shopping season. At least Congress can't be blamed for scheduling Thanksgiving for Nov. 28.
The most upbeat forecast publicly comes from a company that has stumbled online but is ubiquitous in the real world: Wal-Mart ( WMT ).
At a recent meeting with analysts and investors, Wal-Mart predicted the upcoming holiday season would be its best ever, in spite of-or perhaps because of-the economic uncertainty. Like other budget-oriented retailers, it is meeting consumer frugality with a layaway program that allows its customers to pay over time. Tablet computers were among the top five categories of items currently on layaway.
With only about 1% of its sales, or about $5 billion, coming from its website last year, Wal-Mart is finally trying to compete online with Amazon.com, which has about $34 billion in sales.
The National Retail Federation is forecasting that holiday spending overall will increase 3.9% this year, to $602.1 billion, a slight improvement over the past two years. But its forecast is loaded with cautionary language about the general sense of uncertainty among consumers. In its survey, 29% said fear of the effects of political gridlock would affect their spending plans.
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