Not everyone is splurging this holiday season.

Commentary about business and finance.
Dec. 16 2003 5:33 PM

Silver Bells, Platinum Bells

Not everyone is splurging this holiday season.

Charles Dickens is the novelist most frequently associated with the sights, sounds, and rituals of Christmas—and Christmas shopping. But this season's (admittedly preliminary) sales figures bring to mind a rather different scribe: John Dos Passos. In the now-passé leftist novelist's 1936 novel The Big Money,amid a screed on the disparities between rich and poor, Dos Passos proclaimed, "all right we are two nations."

This year there's evidence to suggest that we're two nations when it comes to Christmas shopping. If the alleged Bush Boom were in full swing, after all, you'd expect an exuberant Christmas shopping season across the board. But that's not happening. Instead, high-end shoppers are running up tabs like congressional appropriators, while the masses are holding back.

In November, typically a good harbinger for the crucial Christmas shopping season, luxury department stores sizzled. Saks Fifth Avenue's November sales accelerated rapidly. Sales at Neiman Marcus, the overpriced department store chain that also owns Bergdorf-Goodman, rose impressively. Tiffany had a blow-out fall quarter, and its stock stands at levels not seen since the balmy days of mid-2000. If you're thinking about popping into Barneys for an $895 Marc Jacobs Venetia bag, forget about it. It's sold out. Stores that sell $9,000 plasma televisions, like Best Buy, or expensive tchotchkes, like the Sharper Image (electric shoe buffer, anyone?), are also doing well. Online shopping—typically the province of the connected, and hence the better-off—is rising.

Meanwhile, with the Dow above 10,000, Wall Street bonuses are in vogue again. This week the New York Times Sunday Styles section, one of the nation's premier showcases of extreme consumption, hailed the return of over-the-top corporate holiday parties, complete with embarrassing pictures of lawyers kicking up their heels.

Low-end consumers have been doing a different kind of dance this season. First came the mosh pit. Most famously, a woman at a Florida Wal-Mart was trampled and rendered unconscious by a throng trying to get their hands on $29 foreign-made DVD players. (Were he alive today, Dos Passos would no doubt get a 200-page novella out of this episode.) Then bargain hunters turned coy. Weekly sales at the world's largest retailer have been disappointing, and its stock has been hammered.

The stocks at other discounters that cater to what Dos Passos might have called workers—like Dollar General and Kohl's—have slumped, too. In theory, this year wasn't supposed to be a shopping season heavy on promotional enticements. After all, confident people with loaded wallets don't wait for gigantic sales to splurge. But two weeks into the season, Sears blinked and offered big reductions on Dec. 11.

It's tempting to cast the struggles of discounters in a positive light. If you were flush with cash and wanted to buy clothes, maybe you'd shop at Target or J.C. Penney instead of Wal-Mart. Perhaps Wal-Mart's sales are disappointing because its core consumers are trading up this year. But anecdotal data suggests that's not happening. On Monday, Target said that sales at its stores for last week were running "below plan." And J.C. Penney's November same-store sales fell.

Or could it be that two other factors are affecting sales? The poor weather on the East Coast surely discouraged some shoppers. And Hanukkah comes late this year, which may have kept some buyers on the sidelines in the weeks before and after Thanksgiving. But Wal-Mart draws a relatively small portion of its sales from the Northeast, and neither weather nor the calendar seems to have taken a toll on high-end retailers in the region.

Can we divine from a few weeks of retail sales figures a grand metaphor for a newly forged cleavage in the American body politic? We can certainly try. On one side there's the Wal-Mart economy, serving (and affecting) the half of the American population that doesn't own stocks, that has been left out of the market revival and isn't benefiting from lower marginal tax rates. Leveraged to the hilt and pessimistic because of anemic job growth and the prospect of their own jobs being shipped offshore, the masses are buying what they need and not a whole lot more. And it's no small irony that Wal-Mart shoppers tend to reside disproportionately in the red states *—areas that supported President Bush in 2000 but have yet to reap significant gains from his policies.

Meanwhile, the holiday mood is very different among the other half—those who own assets and hence enjoy disproportionately the fruits of higher stock prices and lower dividends, those who work on Wall Street and shop at Tiffany's and for whom offshore is a destination for vacation, not their jobs. Those people are fat and happy and consuming and spending their way to further happiness. Again, it's no small irony that most Barneys and Saks shoppers tend to reside in the coastal red state terrain that Republicans now find hostile. 'Tis the season for Bushenfreude.

Correction, Dec. 17, 2003: The original version of this piece reversed the states' electoral colors, stating that the blue states are areas that supported President Bush in 2000, and that the red states were terrain hostile to Republicans. (Return to the corrected sentence.)

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