Commentary about business and finance.
Nov. 9 2004 4:13 PM

                               Contact: Holly Schilling at Flax & Booker

NEW YORK, N.Y.—Nov. 9, 8:45 a.m.—For immediate release.

Business Release Network—With the presidential election safely behind us, it's time to focus on the Next Big Thing for the United States—the Christmas shopping season. For retailers, the four weeks between Thanksgiving and Christmas can make or break the whole year. According to the National Retail Federation, the holiday season accounts for nearly 23 percent of annual sales. The International Council of Shopping Centers forecasts holiday sales will rise about 5 percent this year. But is this Yuletide really a season for optimism?

Television producers, editors, and reporters interested in a fair and balanced coverage of the holiday shopping season should consider the many things that could go wrong. Flax & Booker is pleased to offer the insights of Will Fretmoor, managing partner of market research firm O.Y. Veigh & Co. Mr. Fretmoor, author of the semiannual Worrisome Trends,is an avid reader of both the New York Times and the Wall Street Journal,an occasional watcher of CNBC, and a frequent visitor to the Mall at Short Hills. Mr. Fretmoor has a knack for speaking pithily, doing his own makeup, and cutting through the optimistic chatter to find the dark linings on all the silver clouds.

"What could go wrong this Yuletide?" says Mr. Fretmoor. "Don't ask. But if you insist on asking, here are my top seven concerns about the 2004 Christmas shopping season."

1. Pump Shock. Despite the recent decline, gasoline prices nationwide averaged $2.04 per gallon last week. As Jay McIntosh, Americas Director of Retail and Consumer Products for Ernst & Young, warned in September, "Higher prices at the pump will have a two-fold effect: higher distribution costs for suppliers and retailers and less disposable income for consumers." That's more cash in Mobil's stockings and less in yours.

2. Motley Fuel. The price of heating oil has spiked in recent months. Consumers in the nation's chillier regions could be shocked into Christmas-season parsimony once they realize they're in for a long, expensive winter. As Merrill Lynch analyst Michael Friedman said at a conference, "Their October bill may give them a scare."

3. Macro Dismay. You don't have to be grumpy ursus like Paul Krugman to worry about structural imbalances, long-term trends in income distribution, and the price of credit. In addition to higher energy costs (see above), the National Retail Federation's chief economist Rosalind Wells cited "rising interest rates, geopolitical threats and slow income growth," as potential Christmas party poopers.

4. Dude, Where's My Cargo? Gridlock may be banished from Washington, but it's wreaking havoc in the nation's transportation infrastructure. In October, Daniel Machalaba and Bruce Stanley reported in the Wall Street Journal that gridlock at the ports in Los Angeles and Long Beach, which handle about 40 percent of incoming container ships, are "adding as much as a week to the typical vessel's monthlong journey from Asia to its final destination in the U.S." and "causing a scramble among manufacturers and retailers counting on the on-time delivery of goods for Christmas."

5. No Phones Home. Also from the Wall Street Journal:concern that cell phone giant Motorola could see a repeat of its disastrous 2003 Christmas season, when it failed to bring sufficient numbers of camera cell phones to market. Motorola's strategy of introducing new products specifically for the Christmas season may invite potential snags in both quality and on-time shipment.

6. The Passion of the Christmas. It's already mid-November, but no must-have Christmas product has emerged. No Tickle Me Elmo, Cabbage Patch doll, or $29 DVD player to send consumers into paroxysms. Marshal Cohen, chief industry analyst with NPD Group, detects a "lack of passion." He continues: "There's no real frenzy to go out and grab an item, simply because there really aren't any hot items this year."

7. Special Post-Election Bonus Worry. For years, trend-watchers (well, at least the editors of Real Simple) have been predicting that Americans, repelled by rampant, soulless consumerism, will embrace a holiday season devoted to spirituality and family. With the Republicans having triumphed in the election and the godless increasingly marginalized in American life, could the momentum carry over from the political season into the shopping season? If the many voters of faith who opted for moral values over their economic well-being put down their checkbooks and pick up the Good Book, tidings at the Gap and Kohl's could be anything but merry.

Mr. Fretmoor is available at your convenience (except on Wednesdays at 8 p.m. Eastern, when he likes to watch Lost). He can be reached by cellular phone, PDA, instant-messaging through a Wi-Fi equipped notebook, or through a broadband television studio in his Morris County, N.J., home. Please contact Holly Schilling at Flax & Booker to arrange a quote.

About Will Fretmoor. Mr. Fretmoor, a self-taught market analyst, once audited a course at the Wharton School. A frequent guest on television and radio, he has been a leading forecaster of retail and economic trends for more than a decade. Among his many books are The Imminent Recession of 1994 and The Montgomery Ward Way: Why the Mail-Order House Will Crush Wal-Mart.

About O.Y. Veigh & Co. O.Y. Veigh & Co. is a leading integrated marketing communications strategy and analysis firm that offers best-in-class products, best-of-breed human capital, and customer-centric applications and solutions.

About Flax & Booker. Flax & Booker is a leading integrated marketing communications strategy and public relations firm that offers best-in-class products, best-of-breed human capital, and customer-centric applications and solutions.