November 20th, 2009 10:33 EST
What Will Christmas Be Like This Year?
For the first time in the history of marketing, there may actually be some truth in advertising. This year, when retailers advertise, get it while we have it ", that might actually be true.
Banks and lenders have reduced the amount of credit that borrowers can borrow. That means that the inventory that manufacturers can manufacture is necessarily reduced. Because banks have cut lines of credit, retailers have less money to buy products that they resell to consumers. And similarly, importers have less money to import and distributors have less money to be able to buy products to distribute.
In general, inventories will be much leaner this holiday season. The devastating lesions from last year`s holiday season are still fresh in the memories of American businesses. Manufacturers have adapted - " and have learned how to produce -- "just in time," meaning that they produce the absolute minimum for the circumstance, conserving cash and reducing labor expense to a minimum.
Last year, retailers were caught with billions of dollars of excess inventory, and they don`t want it to happen again. Therefore, instead of buying two months worth of inventory, they`re buying a few weeks worth of inventory at a time. Walmart isn`t carrying months worth of inventory either. Now they`re managing their inventory on a week by week cycle.
The impact for consumers is that this holiday season retailers will be carrying less merchandise than ever, and there are a few important impacts that every consumer needs to be aware of for this reason:
1. When you see it" on the shelf, buy it, because you don`t know if it will be available tomorrow. With leaner inventories and little time during the season, there is less likelihood for re-stocking in part because manufacturers have created less inventory as well. If you can buy the product, make sure you do, or the kids on your list could be very disappointed.
2. Discounts and sales will be fewer than ever. With demand in excess of supply, retailers are not going to be in a hurry to reduce their prices and reduce their margins. So for the first time in a long time, sales might be low and profits might be high. It`s a different formula than we are used to during the holiday season, but consumers need to be prepared for the fact that there may be a few loss-leaders " to bring you in the door. And the really good products are going to be sold near or at full price.
This might not be great news for consumers, but it is pretty good news for the American economy. And get used to it -- because "just in time" inventory techniques and approaches are the way that American business will continue to operate going forward.
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