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.”


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."



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 . . . 



City Is Shopping for Shoppers in London’s Underground
NYT, December 20, 2006

Retailers Mark Down, But Keep Hopes Up For Christmas Lift   
WSJ, December 18, 2006; Page B1

Procrastinators expected to salvage retail’s season
Angela Moore,
MarketWatch, 3:26 PM ET Dec 20, 2006

Retail Stocks Are Hitting a Ceiling   
Michael Kahn
Barron’s DECEMBER 18, 2006


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What's been said:

Discussions found on the web:
  1. Chief Tomahawk commented on Dec 22

    Well, this reservation ain’t NY. No surge of Brits here. Will keep an eye out for “Super Saturday” traffic and deals. Super Saturday = last Saturday before Christmas… otherwise known as procrastinator’s day…

    By the way, top end mall parking filled to outer lots. Middle class mall parking fine…

  2. spencer commented on Dec 22

    Don’t forget that retailers have a very strong seasonal pattern of underperforming around X-mas. It use to be in December and January but in recent years it has moved forward more to November rather than january — maybe because of gift cards and a shift in discounting so that January after-Xmas sales are no longer significant?

    So far this looks like the normal seasonal pattern for retailers.

  3. Andy commented on Dec 22

    This is almost bullish — what happened?
    Are you feeling all right?

  4. DavidB commented on Dec 22

    Out here on the left coast we experience the same thing. Just substitute Euros for Asians. Mainly from Japan and Hong Kong but as India and China bulk up finance wise expect the full compliment

  5. cygnus commented on Dec 22

    That retail index chart looks like a rising triangle to me, which is usually bullish. Of course that doesn’t mean it couldn’t break to the downside.

    Personally I see Wal-mart sales as a contrarian indicator. Wal-mart is the place to shop for dirt poor folks or people pinching pennies. When Wal-Mart sales start to increase then we know more people are being mindful of their wallets. As long as people are shopping at Target instead of Wal-mart things are probably at least okay.

  6. donna commented on Dec 22

    Target is definitely not overstocking this year though – there’s not going to be much there for after-Christmas sales. I usually see them dropping prices in the week before Christmas, but haven’t seen any of that this year. They plan to sell what’s on the shelves. There are almost no Christmas decorations left in the stores, and they’re already bringing out the storage boxes and Valentine’s cards – unheard of in prior years….

  7. Tuur commented on Dec 23

    170 Euro is the maximum you can import duty free from the States into Europe.After that you (I) pay a 25% import tax. So much for a weak dollar . . .

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