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Mon December 2, 2013
Holiday Sales: Gloomy or Merry And Bright?
MICHEL MARTIN, HOST:
This is TELL ME MORE from NPR News. I'm Michel Martin. Coming up, we want to know how the federal health care website is working today after the Obama administration's self-imposed deadline to get HealthCare.gov running smoothly. We'll check in later. But first, Americans are heading online today for another reason. It is Cyber Monday and retailers are offering bargains to kick off the holiday shopping season or so they tell us.
That's after sales on Black Friday and, in some cases, so-called Black Thursday. That's what some retailers are calling Thanksgiving now. We wanted to know if all those sales actually brought more customers into the stores and how much those customers actually spent. So we called Sudeep Reddy. He's an economics reporter with The Wall Street Journal. He's back with us. Welcome back, Sudeep. Happy Thanksgiving to you.
SUDEEP REDDY: Thanks, Michel.
MARTIN: So give us the news in a nutshell.
REDDY: The news in a nutshell is that more people did visit stores and more people went online than before, but they actually spent less money than they did before over this recent weekend. And that was partly because all these discounts that have been rolled out, it turns out to be a zero-sum game. And retailers are fighting for fewer and fewer dollars from consumers. People are not really in the mood to go out and splurge even though we're four and half years into an economic recovery. Most Americans don't feel like they have the wherewithal to go out and be big-time shoppers right now.
MARTIN: How do we know that? I mean, is this something that consumers are telling us in surveys or is it just that the retailers have actually conditioned customers to wait until they get what they think is a rock-bottom price?
REDDY: We're actually seeing a pretty stark divide in the overall economy right now when it comes to consumer spending. People who have a lot of money, who have high incomes, who have - particularly have a lot of money invested in the stock market are witnessing these huge run-ups in the stock market, record after record. And they are actually spending more money than before. They're going out and spending it at luxury retailers because those are the places that are reporting the stronger sales. The retailers that are at the lower end - the Wal-Marts of the world - are struggling a lot more because they're finding their consumers are not able to afford some of the products that they're selling.
They're not able to really ramp up their spending. And you're seeing - as some public benefits also get cut - food stamps are being cut. They're witnessing the effects of that. And so consumers at the middle and lower ends of the income spectrum are cutting back. They don't have money invested in the stock market - certainly not beyond their 401(k)s. And they are struggling as much as ever before. And they're the reason people are seeing weak wage gains - is because people in most of America is not...
REDDY: ...Experiencing the recovery.
MARTIN: This boom.
MARTIN: ...This recovery. So what about Cyber Monday? I mean, you know, we heard a lot of predictions going into the holiday weekend, which was obviously, as you mentioned, not a holiday for many people - particularly people who work in retail. But what about Cyber Monday? I mean, traditionally this is a day when people who did not want to go into the stores or who looked in the stores in order to buy, then get online and, you know, do their thing. What are we expecting for today?
REDDY: We're expecting a lot more sales than ever before because people who did witness the spectacle, whether it was on the local news or just driving down a highway. You'd see off-ramps backed up pretty badly around the country. A lot of people didn't want to engage in that and so they're waiting for the discounts, waiting for the sales online. There have been a lot of special offers - deep discounts since Thursday online because a lot of people have decided it's not worth the hassle to go out there and walk into stores - department stores that look like a small tornado has run through them. And so they're waiting to do something from the comfort of their own computers and make these purchases.
We're going to have to see in the coming days whether people actually felt like that was enough to get them to spend a bit more than before or whether it's the same trend - this worrying trend that people aren't really going to boost their spending.
MARTIN: Well, you know, in fact - why - if you do intend to shop online, why would you wait until Monday? I mean, why wouldn't you shop Saturday night or Sunday or after you'd finished the dishes or whatever? Why?
REDDY: That's a great question. What - a lot of retailers, whether they're brick-and-mortar stores or online retailers, they've been trying to condition shoppers to look for the best deals. And they've been really working hard at attracting more visitors to their websites, to their stores because it is a really cutthroat environment right now for the vast majority of retailers out there. They're really working hard to make sure they have the best deals that will bring people in and get them to click around or to shop in other departments.
MARTIN: If you're just joining us, I'm speaking with the Wall Street Journal's Sudeep Reddy. We check in from - to him - we check in with him from time to time to talk about, you know, issues in the economy and also sort of personal - your personal economy. So today, we're talking about the holiday shopping season and what we learned from this weekend's numbers. You know, Sudeep, to this point, you talked about how a lot of people don't want to brave these stores that look like a tornado hit them. It's kind of an unappealing environment. There are even some websites now that document, like, fights people have had outside of big-box retailers.
And the comments, while, you know, snarky, also point to what has become kind of a moral debate about - that some people have had about, you know, why do Americans feel the need to force people to work on these holidays? I mean, obviously, some people want to work on these holidays. Perhaps some people have less of an attachment to these national holidays than others, perhaps because, you know, maybe they're international business people who are shopping here to send goods back, you know, to their home countries and so forth like that. But I'm just wondering whether we learned anything from this weekend, whether there was any trend there about whether - it's not just a question of the dollars, but of the values that people bring to the shopping experience that might've influenced people's decision to go to the stores or not.
REDDY: Yeah, there are a lot of lessons here. This entire weekend has become a symbol of American consumerism, about how people live to shop in some ways and to rush out to stores and to dig through bins or to spend their time looking for a deal. That has extremely important implications for our economy and for economies around the world, partly because the U.S. economy for decades has been built on stronger consumer spending. It relies on people going out and spending their money. It relies on consumption, and we have seen fairly weak consumption throughout this recovery. And until we see stronger consumption or until we see a stronger outlook from businesses to go and invest and to do other things with all the cash that's sitting on their books, we're not going to see a stronger economic environment. We're not going to see job growth take off.
And so the economy that we've built over the last few decades relies on consumer spending not just for us, but also around the world. There are countries that are counting on American shoppers to buy their products, their imported goods, whether they're from China or Germany or any other major exporter. They rely on American shoppers to suck in all those goods from abroad. So that's on one level where we've come. The other is, why do we have people lining up outside of stores? Why do we have people rushing through the doors and getting into fights that lead their fellow shoppers, themselves, little kids and even police officers to get injured and sometimes go to the hospital? That, I think, has to do with a much bigger frenzy about the deal and how retailers have captivated so many consumers to try to get this deal and to rush out to get the offer that's going to go away. There are countdown clocks at some of these stores.
You know the deal is going to end at 1 p.m. on Friday. And so you want to rush in and beat everyone else to it because it's not just a cutthroat environment for retailers, but consumers realize there are a limited number of discounts out there. And you don't want to lose out because so many people have been losing out over the last few years. And so you want to make sure you get that deal, particularly if it's a product that you see other people getting and that you're really into.
MARTIN: Do you feel like in a way it speaks to kind of a larger metaphor about this becoming kind of a winner-take-all society, and that somehow the quest for this particular product becomes, you know, emblematic of the whole thing? Let me ask this, Sudeep. In policy circles - I understand that these numbers just came in. And we're going to learn more over the course of the week, particularly about how retailers did today - online retailers did today. But is there any conversation in policy circles, particularly in the upper echelons of business, about the fact that if this recovery is not broad-based and that people with lower incomes and middle incomes cannot participate in the consumer economy, at some point, does that lead to any kind of discussion on their part about broadening out the benefits of this recovery? We've seen in the jurisdiction we are now in - in the Washington, D.C. area - a number of local jurisdictions are talking about combining forces politically to boost the minimum wage.
We've heard that the Obama administration is - particularly the Department of Labor. We heard from the secretary of Labor last week about his efforts to push toward higher minimum wage. Obviously, that's a very controversial issue. People have different feelings about it. But I'm wondering, when you talk to these corporate executives, do they express concern about the fact that this recovery, such as it is, is skewed?
REDDY: Most corporate executives are looking out for their own interest of their company because it is such a difficult environment. They are not, for the most part, looking to boost everyone's wages across the board. They're looking to figure out what will keep their workers and what will make the sale. And as long as you have a relatively weak environment and there are workers willing to work for those lower wages, then retailers are going to pay as little as they have to pay to get the workers they want and to keep them. There is a broader policy discussion, of course, as you mentioned, in Washington, D.C. with the minimum wage, in Washington state.
There has been a ballot amendment in New Jersey. And in municipalities and states all across the country, people are pushing for this because they realize that the folks who are working at these stores should be able to buy some of the products that they're selling. When you're working overnight at a Walmart, when you're working in some very difficult conditions - I don't think anyone would love to be in this environment where you're being trampled over by your customers - you probably deserve better. And that is what I think is feeding this. People - the rest of society, Americans realizing that they want the people around them to be earning a living wage or at least something more resembling a living wage.
MARTIN: And finally, Sudeep - we have about a minute left - you indicated that spending was off. Spending was certainly off - down as the dollar amount was down from last year. Are retailers - and by extension, economists overall - worried about this holiday shopping season and what it might foretell about the economy?
REDDY: We have been worried for year after year since the recession about how this would turn. There have been forecasts every year that people - consumers have been fairly gloomy, and that they would pull back their spending. So far, that hasn't happened for most of the recovery. This is one of the early signs that maybe this time is different. Maybe it will pull back. I think we'll see in the coming weeks that a lot of people might have just deferred their shopping heading into Christmas, and maybe we will actually see some of that boost. But it's certainly not going to be runaway spending that's going to suddenly create a much stronger recovery.
MARTIN: Sudeep Reddy reports on economics for the Wall Street Journal. He was kind enough to join us once again in our Washington, D.C. studios. Sudeep, thank you so much for joining us once again.
REDDY: Thanks, Michel. Transcript provided by NPR, Copyright NPR.