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'Boo!' -- Retailers Scared Stiff!
-- October 30, 2002

Retail executives are starting to panic. Consumers say they have lost confidence in the economy, and they have slashed their spending plans accordingly. Now, with an impending war with Iraq, fallout from the dockworkers' strike, and unemployment still a concern, the majority of retailers are expecting dismal sales for the rest of the year.

Only one in 10 retail executives expect sales to be stronger or the same as last year if the U.S. declares war on Iraq -- and the probability of war is getting stronger by the day. Within the next two weeks, President Bush will reportedly force a vote at the U.N. in order to use a U.N. resolution against Iraq as a launching pad for war, according to the Washington Post.

Adding to retailers' woes is the fact that the dockworkers' strike and subsequent work slowdown has turned their supply chain to rust -- just in time for the holiday shopping season! Those consumers that may still be in the shopping spirit may not be able to get what they're looking for. The port dispute may initially look like a blessing in disguise for retailers who over-ordered for what's shaping up to be a dismal shopping season. But they'll likely have a glut of merchandise when their orders finally show up after the holidays. That will require them to slashing prices, which could, in turn, result in terrible earnings for the entire year.

Even if we don't go to war and the dockworkers suddenly speed up their unloading process, retailers still must contend with the ever-worsening U.S. economy. Economists expect unemployment to jump in October. And we expect the unemployment rate to skyrocket in the coming months. Higher unemployment means even less consumer spending, and that spells disaster for retailers.

We are not surprised that retail executives are shaking in their boots. Until now, consumers have carried the economy on their backs. But the burden has just become too heavy to bear.

related article: Retail Execs Unsure About Business

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