retail news in context, analysis with attitude

The Washington Post reports that the US Commerce Department has issued a new report saying that “as the economy spiraled downward” last December and contracted at a rate not seen in two decades, “consumers retreated, spending $102.4 billion, or 1 percent, less than the month before … The savings rate rose to 3.6 percent from 2.8 percent.”

The result? When consumers held onto their money, it “cut off oxygen” to a broad number of retailers, which is leading to some going out of business (Circuit City, Linens ‘n Things) and others slashing their workforces (Macy’s, Starbucks).

KC's View:
All this means is that a lot of retailers need to learn to hold their breath. And tread water. All at the same time.