Well, Merry Christmas for Retailers, here is one of the best economic commentators on the internet, who has been almost dead on for the last 3 years, telling retail Presidents CEO's and Executives what to expect this year. Yes it is very scary.

Retailers, you are in for an ugly year, the victory will go to the aggressively prepared. There will be many losers.

Don't let that be you.

Bloomberg is reporting U.S. Initial Jobless Claims Rose to 542,000 Last Week.

First-time claims for U.S. unemployment insurance unexpectedly rose last week to the highest level since 1992, a sign the labor market is deteriorating as the economic slump deepens.

Initial jobless claims increased by 27,000 to a higher- than-forecast 542,000 in the week ended Nov. 15, from 515,000 the prior week, the Labor Department said today in Washington. The number of people staying on benefit rolls the prior week rose to 4.012 million, the most since December 1982.

Job losses in the U.S. have totaled 1.2 million this year as the economy entered a downturn exacerbated by the worst credit crisis in seven decades. More firings will weigh on the economy and consumer spending, putting pressure on President- elect Barack Obama and Congress to agree on legislation that will stimulate growth.

The four-week moving average of initial claims, a less volatile measure, increased to 506,500 last week from 490,750 a week earlier. So far this year, weekly claims have averaged 404,000, compared with an average of 321,000 for all of 2007, when the economy added a total of 1.1 million jobs.

Citigroup Inc., the fourth-largest U.S. bank, will eliminate 52,000 jobs over the next year, twice the target announced last month, as loan losses surge and the economy shrinks, the company said Nov. 17.

Carmakers are also shedding workers. Ford Motor Co. plans temporary shutdowns at nine North American plants this quarter, idling as many as 23,000 workers, as it slashes production after an 18 percent drop in U.S. sales this year, the company said Nov. 12.

Layoffs Not Yet Factored Into Unemployment Rate

Announced job cuts have been piling up so fast I do not understand how anyone could be surprised by the number of claims.

Those layoffs at Citigroup (C) and Ford (F) are not yet factored into the unemployment rate. Nor are job cuts at Goldman (GS), JP Morgan (JPM), GE (GE), and scores of other financial institutions. Nor are the huge jobs cuts at retailers that are coming early next year after what is going to be the worst Christmas shopping season ever.

The retailer layoffs have not been announced yet, but it is easy to predict they are coming. When the layoffs are announced and the jobless claims rise yet again, the safe prediction is that economists will once again be surprised by the announcements.

As layoffs and job losses mount, this will add to the downward pressure on retail.

You will need to know your Customers and your market in much greater depth.

You will need to GET AHEAD OF THE CHANGING PSYCHOLOGY

You will need to HAVE INFLUENCE IN THE BUYING DECISION

You will need to use your knowledge to CRAFT the best market offering and value mix

Your knowledge and relationships will allow you to win business and customers.

I have recently worked with a large national retailer who had the smallest drop in sales within their category, because they know the market, the customers and the changing mood.

Your greatest challenge, will be seizing the opportunity.

_________________________________

Martin Hoffmitz
VP, Client Partnering
BehaviorWorx Inc.
#202 - 222 Islington Avenue
Toronto, ON M8V 3W7

Email: martin.hoffmitz@bwxi.com

Office: 416.251.0111 x250

Cell: 647.287.4491
Fax: 416.251.9489
Web: www.bwxi.com

Now it is upon us, I have been speaking for over two years on my fears for a major consumer led downturn, and Best Buy has also lowered the sales guidance for the coming year.

Many retailers will now be in panic mode, what will Christmas bring and what will we do? Well, are you a man, or a mouse?

A rising tide lifts all boats, for the last 14 years, we have been in one of the longest business up cycles in modern history. Sales gained year over year, store on store.

You may have noticed, that that is changing very rapidly. Any business gain that you now have will come from one of two sources:
1. Finding new markets or niches to service
2. Conquest of the customers of your COMPETITORS

You and your organization will naturally go into "safety mode" that is the natural response to slowing markets for most retailers. What will differentiate the winners from the losers over the next 12 months?

The winners will decide to cut back fiscally, while intelligently spending in selected areas, that will help them to grow their business. In order to grow your business, you will need to find new market niches and services and steal customers from your competitors.

Eat or be Eaten.

If you are not doing it successfully, will your competition be sitting still?

I will give you an example, one retailer was competing against one of the most successful jean retailers in North America. They had to discover who the customer, the in store non buying traffic and the competitor customer was, what she wanted and they had to know a lot more about her fast.

By using an integrated, extended engagement and feedback program, they discovered some very profitable insights.

This retailer thought that they had to be the "Jean Experts" in order to outpace the competitor. Through the extended engagement and feedback program, they learned about the in store non buying traffic and the competitor customer.

Surprisingly, she was not as interested in "Jean Expertise" as this retailer thought. She wanted something less tangible but far more important for sales.

She wanted "Brand excitement" and "A Compelling Story" attached to the store and brand experience.

Now, being "Jean Experts" was very costly and frustrating, as a constantly changing front line workforce had to be continually trained and monitored as "Jean Experts"

So, this smart retailer, used the in depth insights into the real time experience of:
1. The Customer
2. Non Buying in Store Traffic
3. Potential Target Market (including competitor customers)

Smart retailer developed a simple ad campaign, supported by a variety of in store marketing and display tools, to tell a compelling human story around different jeans, linked to emotional experiences in the specific jean.

Did it work?

Like wildfire.

In the last quarter, this retailer gained sales, while everyone else in the market segment lost ground.

By really knowing the customer , the store traffic and the potential customer, this retailer took control of a bad market.

By not retreating, but looking for opportunity, this retailer is winning in tough times.

Now, for extra credit, this retailer can measure in real time, the impact of the new experience in the store and with the staff.

Everyone is happy, and a Merry Christmas will be had by all.

Lesson: Knowledge is Power and

Do not let the market condition dictate defeat.

_______________________________

Martin Hoffmitz
VP, Client Partnering
BehaviorWorx Inc.
#202 - 222 Islington Avenue
Toronto, ON M8V 3W7

Email: martin.hoffmitz@bwxi.com

Office: 416.251.0111 x250

Cell: 647.287.4491
Fax: 416.251.9489
Web: www.bwxi.com