Ominous Thoughts for Christmas in July
I can recall fond memories of Christmas past unwrapping the latest CD by Coldplay or the Dave Matthews Band. And I can remember that great feeling I would get while opening a brand-new, pristine book and leafing through the pages on a snowy Christmas morning in front of a lit tree. But with the recent financial crisis, technological growth, changes in American society, and changes in consumer culture, those warm sensations may simply be a thing of the past.
The Borders Group (BGPIQ) sent shockwaves through the retail world yesterday when it announced that it would liquidate its holdings and close its remaining stores across the country. This came as unfortunate news for patrons, such as myself, who loved Borders Books & Music stores. Aside from its great books and music, Borders exhibited a warm atmosphere for many consumers. (I must confess: I even met my fiancée at a Borders cafe.)
As I heard the news of Borders closing, and as I recalled the various Borders gift cards I gave and/or received over the past Christmases, I began to wonder, "What exactly am I going to get people for Christmas this year?"
Make no mistake about it – the holiday season is the cornerstone and lifeblood of the American retail world. Last Christmas I had issues getting people gifts as tastes and budgets have changed. In the past, you could get someone books, but now people use e-book readers such as the Amazon (NASDAQ: AMZN) Kindle or the Barnes & Noble (NYSE: BKS) Nook. In the past, you could get someone CDs, but now people download music via the Internet. And have you been to a Best Buy (NYSE: BBY) recently? Let me just say that its music section is not what it once was.
And yes, even without Borders, there is still Barnes & Noble. But the idea of Barnes & Noble having a strong quasi-monopoly in the arena of bookstores should not sound appealing for the avid consumer, whereas the cost of books could increase and the available in-store supply could be diminished.
And this gift-giving dilemma goes beyond books or CDs. In the past, you could buy children toys, but even Toys "R" Us has had its bouts of financial downturn. Several years ago there was talk of Toys "R" Us closing its doors as less children were playing with toys. And so, with the prospect of there being no bookstores, music stores, or toy stores, it's enough to make one wonder: What are people going to buy for each other during the holiday season?
But, alas! Do not fret. There are always establishments such as World Market, run by Cost Plus (NASDAQ: CPWM). Where I had once turned to Borders or Best Buy to seek out holiday gifts, I now go to World Market, which has proved to be a stalwart retailer for gift-giving.
Another good store for gift-giving purposes is Kohl's (NYSE: KSS), which offers a wide range of quality clothing and products for consumers at reasonable price levels. And in terms of holiday shopping, we cannot forget about Wal-Mart (NYSE: WMT).
It is safe to say that with the fall of Borders, shoppers will look more to stores such as World Market, Kohl's, or Wal-Mart for the holiday season, thereby increasing the market share of retail stores that do not specialize in books or music.
When it comes to gift-giving, we cannot forget things like video games, household appliances, restaurant gift cards, and movie gift cards. Nevertheless, despite the lure of such gifts, they do not spur the same holiday excitement. I can now only reminisce of opening a brand-new book or CD that my parents had purchased at Borders.
The closing of Borders may indeed be signaling a major change in consumer shopping habits. And it may be a major change in the American consumer culture that resonates into the holiday season. But perhaps this will encourage some to view the holiday season differently. Maybe the holiday season will become less commercialized...or maybe not. Either way, I guess we can always give food as gifts during the holidays. Food always seems to do the trick.
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