“Ho-Ho-Ho” or “Ho-Hum”?

Getting the best from a tough retail season

Anyone who’s read a paper or turned on the news is aware of America’s current financial crisis. Amidst the sluggish economy, mortgage crunch and a volatile stock market, Americans have clearly tightened their budgets. How this crisis will affect the 2008 holiday shopping season has yet to be determined, but most experts agree that the shopping season in 2008 is not likely to deliver the spending gains retailers enjoyed in previous years.

According to the National Retail Federation’s annual holiday forecast, sales for the 2008 holiday season are expected to rise 2.2%, to $470.4 billion. And while it’s an impressive number, this gain would fall well below the ten-year average of 4.4% in annual holiday sales growth. In fact, 2008’s projected holiday sales growth would represent the slowest growth since 2002, when holiday sales rose just 1.3%.

With consumers acting more Scrooge-like with their holiday spending, retailers must work to make their sales and promotions as competitive as possible, because everything will take a backseat to price this holiday season. But retailers can face the holidays with a realistic, yet resilient approach: Bad economy or no bad economy, the holidays are coming. The road may be a little rockier than usual, but as the National Retail Federation study indicates, consumers will still be spending.

The best thing that our Sponsored Search advertisers can do is to make their ads as appealing as possible: Make sure that shoppers know about holiday specials, sales, free shipping offers and anything else that will attract interest starting this week. Your customers are out there, but you’ll need to work harder to grab them.

A bright spot in this gloomy news is that the economic slowdown may end up stimulating online sales, if cash-strapped consumers turn to the Internet to find great deals not available at brick-and-mortar stores. Lower prices — minus the hassle of driving, plus the ease of things like comparison shopping, user reviews and free delivery — could make the idea of online shopping even more appealing this season to those who would normally head for the malls.

— Noah Belson, Content Quality Analyst