Retail detail

By David Lisbona

As we approach “Black Friday” and “Cyber Monday” in the U.S., the traditional start of the Xmas buying season, there are many who are quite concerned about the 2009 holiday shopping season. With U.S. and Canadian unemployment rates rising and showing no signs of having hit their peak and the North American economy on the slow mend, people are asking whether retailers are going to have a “holly jolly Christmas” or whether it is going to feel as if they got run over by Santa and his reindeer.

It is amazing to me that Black Friday is effectively the day that U.S. retailers have a license to commit fraud. The time of year that retailers take out whole page ads to offer big screen televisions, among other items, for practically nothing, enticing thousands of people to line up as if the prize at the end of the line was U2 tickets or better yet the H1N1 vaccine, only to be told once they get inside that there are only three items per store. Deceit at its finest, but that is the American retail way. How many deaths by trampling are going to occur this year in the name of materialism? But I digress.

Cyber Monday is a creation of only the last few years, the idea being that after a Thanksgiving weekend of celebrating with family, Americans return to their work computers and commence their online shopping. I am not sure why this phenomenon is measured on the Monday as opposed to the Friday, moreover, has anyone noticed that the Internet is now open on weekends?

So what is the 2009 holiday season going to be like? Well, call me an optimist, but I believe that holiday sales this retail season are going to surprise to the upside.

Whereas last year, there was fear and loathing about what was happening to the economy, during this Christmas season for the millions who are secure in their employment, there is a greater feeling of consumer confidence. I believe that consumers, both in Canada and in the United States, have accepted the fact that the worst of this economic crisis as far as employment is concerned is behind us and there is less of a concern about whether they are going to have a job in three to six months than was the case last year. With the stock market recovery since the “Nemo” bottom, consumers have seen their stock portfolios rebound nicely, if not completely. The only major caveat is with the decline in the price of housing, are consumers going to have the confidence to continue their spending ways with the loss of value of their most valuable asset? Frankly, that is the only Grinch in the ointment this holiday season.

In the end, what I believe will happen is that retailers will be scrambling to find enough inventory to satisfy demand, with the U.S. consumer shopping furiously with the mindset that the U.S. government will always be there to bail them out and let’s not forget the added stimulus of their wealthier Canadian neighbors exchanging their valuable loonies for U.S. wares and smuggling them across the border. I actually have some concern for Canadian retail sales in light of our lofty dollar.

I’m not convinced that Black Friday will be anything to get excited about, bricks and mortar isn’t as sexy as it once was. I am convinced, however, that online sales will not only break but smash previous Cyber Monday records although truthfully, I don’t believe that one day, i.e. Monday will be any more telling than any other day during the week after American Thanksgiving. This consumer spending, I believe, is going to give the stock markets in both Toronto and New York a lift which should last well into the beginning of 2010. I’m not so sure what the future holds after Dick Clark’s illuminated ball falls in Times Square, however, as I believe that any economic euphoria may end soon after the calendar turns.

So as we wait for the retail sales numbers to be released this week and early next, one can only hope that Christmas will come early for many retailers. Otherwise it may end up being a blue Christmas. Now take out your credit card and do your part, there are many people counting on you!

David Lisbona is the Chief Investment and Taxation Officer at Nellie Capital Corp., a Montreal private equity firm and can be reached at investing@thesuburban.com

The opinions expressed herein are those of the author and are provided for informational purposes only. They are meant to stimulate and challenge your financial advisor/broker/lawyer and/or accountant to examine the issues raised and to determine whether they can be used in your best interest.