{"id":931,"date":"2011-01-04T20:30:42","date_gmt":"2011-01-05T00:30:42","guid":{"rendered":"http:\/\/retailprophet.com\/blog\/?p=931"},"modified":"2011-01-04T20:30:42","modified_gmt":"2011-01-05T00:30:42","slug":"2011-the-good-the-bad-and-the-reality","status":"publish","type":"post","link":"https:\/\/www.retailprophet.com\/2011\/01\/04\/2011-the-good-the-bad-and-the-reality\/","title":{"rendered":"2011: The Good, the Bad and the Reality"},"content":{"rendered":"

By Doug Stephens<\/p>\n

The Good<\/strong><\/h3>\n

If you\u2019ve been reading business media lately, you\u2019d be inclined to believe in Christmas miracles.\u00a0 By some accounts<\/a>,<\/strong> the positive holiday retail sales results are nothing short of the harbinger of true economic recovery.\u00a0 They portray a situation where despite ample reasons to refrain from spending, consumers inexplicably took it upon themselves to pull the economy out of recession, setting the course for renewed growth 2011.<\/p>\n

It\u2019s an inspiring story but hardly realistic.\"\"<\/a><\/p>\n

The Bad<\/strong><\/h3>\n

The other media camp prefers to perpetuate the fear that the economy is teetering on the brink of disaster.\u00a0 They would have us believe that any uptick in retail is purely an irrational consumer response fuelled by pent-up demand and deep retail discounts.<\/p>\n

The problem with both these perspectives is that while making for provocative headlines, they don\u2019t really convey what\u2019s actually playing out currently or likely to take place as we move into the future.<\/p>\n

The Reality<\/strong><\/h3>\n

The truth is that between 2008 and 2010, prompted by fear and over indebtedness, the average American actually saved<\/em> money.\u00a0 In fact, the personal savings rate improved quite significantly from a low of about 1-2 percent in 2008 to closer to 6 percent in 2010.\u00a0 While this remains below the 50 year average of around 7%, it is almost double the 15 year average of 3.4 percent.\u00a0 And whether these savings went into bank accounts or were being used to pay down credit really doesn\u2019t matter.\u00a0 This de-leveraging is a meaningful change in behavior and a trend that may continue well into the current decade.\"\"<\/a><\/p>\n

Consumption is decidedly more considered, more calculated and more cash dependent. \u00a0\u00a0In fact, recent research from Mintel indicates that \u201cin the US, a third of consumers say they\u2019re using debit rather than credit\u201d and debit transactions are estimated to have risen nearly 60% between 2000 and 2010.<\/p>\n

Therefore, for the first time in many years, the average consumer\u2019s financial breathing room improved, albeit very slightly. \u00a0It makes sense therefore, that shoppers might allow themselves a degree of holiday indulgence, given their obvious restraint over the past 2-3 years.<\/p>\n

Where this flight to thrift will taper off is unknown but it wouldn’t be beyond possibility for the savings rate to hit double-digit levels. \u00a0And as long as consumers are bent on increasing their cash reserves and paying down debt, retail growth through 2011 will be flat to modest at best. \u00a0This isn’t a matter of opinion, it’s just simple math.<\/p>\n

The Future<\/h3>\n

Unfortunately, the future isn\u2019t as simple as the headlines might have us believe.\u00a0 The situation can hardly be neatly summed up in the words recession<\/em> or recovery<\/em>.\u00a0 It\u2019s considerably more complex and dynamic.<\/p>\n

In next week’s post, I’ll share some thoughts on why coming economic reconstruction is anything but a recovery and how astute retailers can not only survive it but thrive in it.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Doug Stephens The Good If you\u2019ve been reading business media lately, you\u2019d be inclined to believe in Christmas miracles.\u00a0 By some accounts, the positive holiday [\u2026]<\/span><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[101,42,46,24,25,23],"class_list":["post-931","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-consumerism","tag-future","tag-marketing","tag-retail","tag-retail-sales","tag-trends"],"yoast_head":"\n2011: The Good, the Bad and the Reality | Retail Prophet<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.retailprophet.com\/2011\/01\/04\/2011-the-good-the-bad-and-the-reality\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" 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