The 2008 holiday shopping season reflected both the economic woes and the reduced consumer confidence that abound in today’s retail markets.
“Worries about their jobs, the difficulty in accessing credit, and the uncertainty about the economy caused many consumers to exercise restraint and to use cash for the purchases they did make,” said Deanne Butchey, instructor, Department of Finance and Real Estate and assistant dean, Assurance of Learning and Accreditation.
Butchey points out that shoppers did their due diligence to save money on holiday gifts purchased—and that in some areas the shopping season was not a total disappointment.
“Luxury stores had stampeding customers taking advantage of generous sales and promotions,” she said. “What’s more, many consumers shopped on the Internet to get gift ideas and to locate bargains. Educated consumers also purchased a larger share of their gifts on the Internet to save money on gas and to benefit from retailers’ free shipping offers. In addition, Internet searches made it easier to comparison shop.”
Buying patterns shift.
According to Butchey, consumers who turned to the Internet had more cash to spend because of the savings on gasoline expenditures. However, they tended to purchase only useful items that were reduced markedly and represented good value.
“Stores were prepared for this and had leaner inventories, so items in high demand ran out very quickly,” she said.
South Florida retail market reflects regional challenges.
Florida, along with Arizona and California, has been “ground zero” for foreclosures, which spurred the rapid erosion of consumers’ perceived home equity and wealth.
“Combine the real estate slump with the stock market slump and you see why South Floridians are in general feeling more despondent than the rest of the country,” Butchey said. “Thankfully, we did not have depressing cold and stormy winter weather to compound our sentiment!”
Numerous stores in South Florida have shut their doors, including KB Toys, Linens ’n Things, Mervyns, Sharper Image, and Whitehall Jewelers.
“Tourists who usually arrive and shop are staying away from Florida this year, lured by phenomenal deals in the Caribbean and Mexico,” she said. “Those deals are driven by the fact that poor economic conditions in Great Britain and Europe are keeping many potential tourists from those regions at home, which is in turn reducing overall demand and generating appealing price deals for those who can afford to choose travel to the Caribbean and Mexico over trips to Florida.”
What’s in store for 2009?
Moving into the New Year, larger stores will demand rent concessions. This will help the retailers’ bottom line while spelling bad news for commercial real estate markets, especially for highly leveraged property owners.
“Strong stores will survive—and with less competition,” Butchey said. “I do think we are in for a tough 2009. The new administration brings a glimmer of hope, but there is a danger of expecting too much too soon. That could see us revisit recent stock market lows if the market doesn’t quickly get a clear view that the proposed stimulus package will be enough.”
Butchey was quick to point out one bit of good news displayed in the University of Florida’s monthly consumer confidence report: Consumer confidence among Floridians rose five points in January, 2009. Although the report did show that consumers felt very pessimistic about their current personal finances, the other four components of the index rose, reflecting optimism about the future.