NYC Tourist Shopping Extravaganza

You better not pout, I’m telling you why . . .

I’ve been fighting the crowds here in NYC — in Grand Central Station, in Rockefeller Center, in stores and restaurants. The place is crowded with holiday shoppers and with tourists, but I’ve been noticing something interesting lately: The city is  particularly thick with Brits and Euro visitors, all spending quite freely.

I assumed the Euro and UK shoppers taking advantage of the weak dollar, and they surely are. But it turns out that NYC is advertising the City as a shopping destination for Londoners, taking out adverts in the Tube: City Is Shopping for Shoppers in London’s Underground

“Few places on the planet could make New York seem inexpensive, so the city’s tourism officials have gone fishing for bargain-hunters in the subways of London.

This week, NYC & Company, the city’s marketing and tourism arm, placed ads in five of the busiest underground train stations in London promoting the savings to be had in New York with the dollar near a 14-year low against the British pound.

“Pound for pound, New York City is the place to be,” the ads read. “Well, make that pound for dollar.”

Indeed, London was the only city ranked more expensive than New York in a recent report published by UBS, a Swiss financial services company. The strength of the pound has contributed to London’s rise: Yesterday, it was worth about $1.96, up from about $1.60 four years ago.”

Clever.

But NYC is not the entire country, as we have been told so many times before.

Meanwhile, in the rest of the nation, Retail is rather split — the high end continues to outperform the discounters, with much of the lower end doing somewhat less well. Target seems to be a notable exception, with lots of Middle Class shoppers going down market for bargains. Wal-Mart, Best Buy and Circuit City are doing massive giveaways at break even or even loss leaders, (with the thought process being they wil perhaps make it up in volume).

But based on what major retailers have said, and what we see in the overall increase in credit card usage,  Xmas shopping won’t be a disaster — but its far from the terrific forecasts the cheerleaders have been making.

Could Xmas shopping surprise to the upside? Sure! The Retailers have been marking down, even as they keep hopes up, trying to draw more traffic in and sell higher margin items. So far, this has not been a successful strategy.

The latest meme making the rounds is that the shopping procrastinators will salvage the season.

Maybe. But as Barron’s has pointed out, the Retail Stocks themselves are hitting what has been a seasonal ceiling:

" ‘TIS THE SEASON to go shopping. And if we are to believe recent economic reports such as November retail sales, things are looking pretty darn good. Predictably, upon receiving the news, the financial markets got peppy. A healthy consumer is just what the doctor ordered.

One measure of the fortunes of retail stocks, the Morgan Stanley retail index (ticker: MVR) proceeded to break out last week from the trading range that had trapped it since October (see Chart 1). Normally, this would be very positive for the sector but by the time the week ended, the index had dipped back below its breakout price. That’s not a good thing.

In technical analysis, patterns seen on the charts represent the jockeying for position by bulls and bears. When prices move from patterns, either higher or lower, it tells us which side has taken control. With the retail index, the bulls made the first move."

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So if retail comes in weaker than the generally bullish forecasts, you better not pout. Or at least, you best not complain you were never  warned . . . 

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Source:
City Is Shopping for Shoppers in London’s Underground
PATRICK McGEEHAN
NYT, December 20, 2006
http://travel.nytimes.com/2006/12/20/nyregion/20ad.html

Retailers Mark Down, But Keep Hopes Up For Christmas Lift   
STEPHANIE KANG, CHERYL LU-LIEN TAN and KRIS HUDSON
WSJ, December 18, 2006; Page B1
http://online.wsj.com/article/SB116640984863753131.html

Procrastinators expected to salvage retail’s season
Angela Moore,
MarketWatch, 3:26 PM ET Dec 20, 2006
http://tinyurl.com/ygw3gw

Retail Stocks Are Hitting a Ceiling   
Michael Kahn
Barron’s DECEMBER 18, 2006   
http://online.barrons.com/article/SB116646856409853596.html