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It Could Be a Happy Holiday Season – Or Maybe Not

7 Oct, 2003 By: Holly J. Wagner

Fasten your seatbelts. And then tighten them, because I think this holiday season is going to be a bumpy ride.

Already analysts are making predictions that range from wild optimism to utter doom for retailers this holiday season.

The National Retail Federation released an optimistic 5.7 percent growth projection in mid-September, but said it would probably revise that forecast down as consumer confidence and debt reports are telling a different story. Forrester Research predicts a 42 percent increase in online spending, but that may just mean shifting sales from malls to computers.

I don't have answers or analysis as much as gut instinct, but my gut instinct is usually pretty good in these matters, so I'm going with that.

My gut instinct says spending this year, with a few possible exceptions, will be dismal, because pretty much everyone whose job title isn't initials starting with a ‘C' is in pretty dire straits these days.

Some people, victims of the longest “jobless recovery” ever, have no job titles at all. Chances that they will be blowing wads of cash on robotic pets or high-end video game consoles seem pretty slim; I expect a lot of those folks to spend their unemployment checks on the family holiday dinner, new winter clothes and maybe one or two special gifts.

For the rest of consumerdom, worries about the economy in general, credit debt and job stability are likely to cool spending. We've all heard how home refinancing has propped up the economy during this recession, but by now that cash has to be running out for a lot of people, and mounting interest rates have stopped others from refinancing at all.

That could be good for game and video rentals, because people who are counting their pennies are more likely to opt for the incremental expense of renting as opposed to the outlay of a purchase. It could be really good for rental subscriptions, which offer a real value in tight economic times.

Or maybe the quantity and quality of bonus features will make some folks buy discs instead of renting them, figuring they will get more bang for the buck by getting several hours more of entertainment for their money. It could add up to a “buy the disc, rent the game” mentality, partly because game prices tend to be stable and higher, while mass merchants make discs accessible with discounts in their first week or two of release.

For now it's anyone's guess, but I'll try to keep you posted.

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