The New Ethics: When Will the (Retail) Market Bottom Out?
[EDITOR’S NOTE]: “Political Physics” by Monique King-Viehland will be back next week.
So NPR, NYT, and even FaN has done quite a few pieces, asking when the housing market will bottom out, you know really, really hit rock bottom, so that the folks that still have jobs and good credit can pick up a sweet deal on a house. The latest I’ve heard is Spring 2009.
However, lately I’ve become more concerned with another market bottoming out — Retail.
I’ve been finding it hard to acquire a new maternity wardrobe b/c every time I look up, the quality companies that I want to buy from are having bigger and bigger sales. If you thought the Black Friday deals were good, how about right before Christmas when lackluster sales meant slashed prices? Then how about picking up all the leftover inventory right after Christmas — it was practically free? And you know if Mervyns is going out of business, then higher-echelon brand names and stores can’t be far behind.
Should I wait a few months before ordering sized-up shoes for my swelling feet. If I wait til Spring of 2009 after the winter has passed, will I finally find a pair of Fryes boots in my miserly price range?
Also, I love my 2-door Echo, because it was the first big-girl car that I ever acquired for myself, however, it has no power steering or power locks and it probably won’t work with a car seat. Still, when should I buy a car to suit my new lifestyle? Conventional wisdom says now is the best time, because dealers have cars left over from the Christmas season, and they’re desperate to make room for the newer models. But I want a Ford Escape Hybrid. And Ford’s not doing so hot. Should I wait for them to bottom out, too?
Last but not least, when do these questions cross the line from smart shopper to crisis scavenger? I don’t believe that Americans should shop our way back to economic stability, but I also don’t want to dance on the graves of all of our ruined businesses. What do you guys think? Have you dealt with the same ethical questions? And what do you think is appropriate shopping behavior for the current economic climate?
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I think we will continue to see significant sales and savings, but I do not think it will reach incredible levels where an item that usually sells for a $1000 will now go for $250 or something like that. Retailers may reduce their profit but they are going to make a profit if they can help it. You'll get your Ford Hybrid for cheaper, maybe even invoice but it will be harder to find because they will produce fewer models. But, I'm not sure that the retail market is really going to hit rock bottom. The problem is it is hard to judge the stability of the market. For instance, Starbucks does not show a profit for for the first quarter in history so all of a sudden they start closing stores, cutting workforce, etc. They were not in danger of going out of business, just of not making as much money as before. And the merger and buyouts of companies, means reduced competition to some degree but does not necessarily mean that market is tumbling.
I think the most appropriate shopping behavior for the current economic climate is for people to live within their means, no matter what is on sale! And do not take on any unsecured debt (or additional unsecured debt for people like me) of any kind if you can help it. Remember, if you get yourself into or further into financial trouble, there is not bailout plan for the average America so nine out of ten, you're on your own!
Oh and yes these questions stink of crisis scavenger!
I think we will continue to see significant sales and savings, but I do not think it will reach incredible levels where an item that usually sells for a $1000 will now go for $250 or something like that. Retailers may reduce their profit but they are going to make a profit if they can help it. You'll get your Ford Hybrid for cheaper, maybe even invoice but it will be harder to find because they will produce fewer models. But, I'm not sure that the retail market is really going to hit rock bottom. The problem is it is hard to judge the stability of the market. For instance, Starbucks does not show a profit for for the first quarter in history so all of a sudden they start closing stores, cutting workforce, etc. They were not in danger of going out of business, just of not making as much money as before. And the merger and buyouts of companies, means reduced competition to some degree but does not necessarily mean that market is tumbling.
I think the most appropriate shopping behavior for the current economic climate is for people to live within their means, no matter what is on sale! And do not take on any unsecured debt (or additional unsecured debt for people like me) of any kind if you can help it. Remember, if you get yourself into or further into financial trouble, there is not bailout plan for the average America so nine out of ten, you're on your own!
Oh and yes these questions stink of crisis scavenger!
I'm confused by your statement that you've "been finding it hard to acquire a new maternity wardrobe b/c every time [you] look up, the quality companies that [you] want to buy from are having bigger and bigger sales." Is it that the sales are resulting in a complete selling-out of inventory? Are the stores going out of business before you can set foot in them? I don't mean to be flip, but what is actually physically holding you back from acquiring what you need? (Notice I said "need," not "want," as you should only every shop for what you need in ANY economy!)
RE: car buying – even if Ford went into bankruptcy protection & restructuring, Ford would continue to make cars. Right now you could probably get a good deal on the price of a car, the only problem would be financing (if needed) – could you negotiate a good rate in this credit crisis environment, or even get a loan at all? It's only going to get worse before it gets better. Have you read the Motley Fool's guide to car buying? I highly recommend it. The first rule of buying a new car is DON'T! :)
I'm confused by your statement that you've "been finding it hard to acquire a new maternity wardrobe b/c every time [you] look up, the quality companies that [you] want to buy from are having bigger and bigger sales." Is it that the sales are resulting in a complete selling-out of inventory? Are the stores going out of business before you can set foot in them? I don't mean to be flip, but what is actually physically holding you back from acquiring what you need? (Notice I said "need," not "want," as you should only every shop for what you need in ANY economy!)
RE: car buying – even if Ford went into bankruptcy protection & restructuring, Ford would continue to make cars. Right now you could probably get a good deal on the price of a car, the only problem would be financing (if needed) – could you negotiate a good rate in this credit crisis environment, or even get a loan at all? It's only going to get worse before it gets better. Have you read the Motley Fool's guide to car buying? I highly recommend it. The first rule of buying a new car is DON'T! :)
Incidentally, to answer your overall question regarding the moral complexitities of purchasing from stores during what I call the "Greater Depression," I'd say why bother wondering. If you're getting a good deal, why not grab it? Is it "taking advantage" of a bad situation. Yes, but think about it – for years retailers have taken advantage of consumers by escalating prices (and sometimes radically overpricing) and hosing people on financing & interest rates (well, the credit card companies did that, too.) Why should we feel guilty if the pendulumn has now swung the other way? Realtors know this all too well – the concept of a "buyer's" market vs. a "seller's" market. And you know the old catchphrase – "When there's blood on the street, buy real estate." So go out and buy that Ford you're lusting over. Who knows? Maybe in a few years it'll be an antique! :P
Incidentally, to answer your overall question regarding the moral complexitities of purchasing from stores during what I call the "Greater Depression," I'd say why bother wondering. If you're getting a good deal, why not grab it? Is it "taking advantage" of a bad situation. Yes, but think about it – for years retailers have taken advantage of consumers by escalating prices (and sometimes radically overpricing) and hosing people on financing & interest rates (well, the credit card companies did that, too.) Why should we feel guilty if the pendulumn has now swung the other way? Realtors know this all too well – the concept of a "buyer's" market vs. a "seller's" market. And you know the old catchphrase – "When there's blood on the street, buy real estate." So go out and buy that Ford you're lusting over. Who knows? Maybe in a few years it'll be an antique! :P
great advice. we want the 2007 hybrid or at least a used 2008. i hadn't thought about negotiating the loan. i'll have to look into motley fool's.
i'm hesitating to buy more maternity wardrobe, because the prices of things keep going down, and if i'm going to buy something cute — not because I need it, but b/c it makes me feel like less of a schlub to have cute maternity clothes — I don't want to look up and see that it's half off tomorrow. i agree with you about want vs need in any economy, though. however, I'm having trouble convincing myself of that when i look in the mirror.
great advice. we want the 2007 hybrid or at least a used 2008. i hadn't thought about negotiating the loan. i'll have to look into motley fool's.
i'm hesitating to buy more maternity wardrobe, because the prices of things keep going down, and if i'm going to buy something cute — not because I need it, but b/c it makes me feel like less of a schlub to have cute maternity clothes — I don't want to look up and see that it's half off tomorrow. i agree with you about want vs need in any economy, though. however, I'm having trouble convincing myself of that when i look in the mirror.