Turkeys & zombies

Black Friday will leave many stores feeling blue

Rising holiday sales won't revive all American retailers. Black Friday kicks off what promises to be one of the best shopping seasons in years. Lower gas prices are putting about $180 million per day in consumer pockets. More Americans are gainfully employed and feel less pressure to pay down household debt. But it won't be enough to cure shopkeepers suffering from online competition.

There's plenty of reason for cheer. The average price of a gallon of gas is nearly 50 cents lower than a year ago. If sustained, a reduction of this size saves consumers about $70 billion over a year, much of which is likely to be spent. Shoppers also have less to worry about. More workers have found jobs - the unemployment rate was 5.8 per cent last month, a six-year low. And consumer confidence hit a seven-year high, according to the Conference Board.

There's a balance-sheet effect too. Household debt is less onerous. Helped by low interest rates, debt-service payments fell to 9.9 per cent of disposable income in the second quarter, the second-lowest since 1980. Overall debt burdens, while still historically high, have also fallen.

This all explains why the National Retail Federation, an industry cheerleader, projected last month that holiday sales would leap 4.1 per cent. The forecast for November and December - excluding spending on cars, gas and restaurants - compares with a 2.9 per cent average bump over the last decade.

Not every retail chain will be able to take advantage. Look at some members of the Breakingviews Zombie Retail Index. Mismanagement at Sears and J C Penney tainted their appeal to consumers.

The rapid growth of online shopping and shifting technology has infected others, turning them into the walking dead. Amazon's convenience and low prices have effectively made a showroom of rivals like Best Buy or RadioShack, which this week tweaked the terms of a rescue financing. Barnes & Noble and GameStop's business models look rancid, as books and video games are increasingly distributed virtually.

These chains have seen sales decline over the past few years, even as the economy has slowly recovered. Meanwhile, Amazon is growing at nearly a 20 per cent clip. A bountiful holiday shopping season may allow sick retailers to shuffle a bit faster, but it's unlikely to lead to sustained recovery.