VCU Expert Sees Stressful Holiday Retail Season Ahead

By Tom Gresham

Holidays are always a critical time for retailers, but this year’s holiday shopping season looms especially large because of broader economic concerns, according to David Urban, professor of marketing and interim dean of the VCU School of Business.

In light of high unemployment and continuing questions about how much consumers are willing to spend, Urban said retailers enter the holidays “extraordinarily nervous.” Many retailers that have been struggling have built their hopes for renewal on a successful run from late November to late December.

“Unfortunately I think a lot of retailers are going to be hurting after the holidays are over,” Urban said.

Urban said retailers’ pursuit of customers has been obvious since before Thanksgiving this year. A barrage of coupon offers and outreach efforts through electronic media, including burgeoning social media plans, have shown the retail segment “really mining their customer databases,” Urban said.

Urban said retailers have told him that they are seeing consumers under stress. Customers are expecting bargains, interacting with fewer store workers than in the past because of job cuts and those workers are feeling the pressure to make sales. It could make for a charged atmosphere.

“The tension in retail environment could be higher this year than we’ve ever seen,” Urban said.

Urban said discount retailers have the best chance to thrive because consumers are checking price tags so keenly. Mid-range to high-end stores, however, “have a problem” because of steadfastly cost-conscious customers. Some potential customers – perhaps past customers – will not even consider high-end stores until they first regain their own personal financial footing. In addition, high-end retailers might be tempted to entice consumers with prices that accommodate tighter budgets, but they risk damaging their brand if they play the bargain card too aggressively.

“They can only discount so much without harming the high-quality image that they want to project,” Urban said.

One way retailers have prepared for a potentially lean holiday is by keeping inventory low – a lesson from last year when stores were stuck with backrooms full of unsold product after the holidays despite deeper and deeper discounts. In the past, Urban said, consumers could wait while the price dropped on an item they had their eye on, waiting until close to Christmas to get the best deal. However, with smaller inventories this year, stores will run out of popular items and be less desperate to move products off the shelves.

“That opportunity isn’t there this year,” Urban said.

About David Urban
David Urban, Ph.D., who has taught at VCU since 1989, has won eight national and international awards for teaching excellence and received the Outstanding Faculty Award in 2001 from the State Council of Higher Education for Virginia, the highest honor for faculty at Virginia’s colleges and universities. Urban formerly held a joint appointment as director of the Survey and Evaluation Research Laboratory in the L. Douglas Wilder School of Government and Public Affairs at VCU. His business and marketing background includes a four-year tour of duty as an officer in the U.S. Navy Supply Corps, as well as training or research assignments with: Ford Motor Company, Hyundai Motor America, Kimberly-Clark Corporation, several other business firms and many Virginia state agencies.