By Ylan Q. Mui and Kendra Marr
Washington Post Staff Writers
Thursday, October 9, 2008; Page A01
Each day of financial tumult is bringing more pressure to bear on the nation’s retailers — and time is growing short.
Yesterday, as the clock ticked ominously down to the critical holiday season, department stores and clothing retailers reported a sharp drop in sales while Target said its shoppers are delinquent in their store credit card payments. Port traffic, meanwhile, has been plummeting as retailers cut back on inventory.
“I don’t think anyone predicted a crisis of this magnitude that couldn’t be fixed quickly,” said Bob Carbonell, chief credit officer for Bernard Sands, a retail rating and credit services agency. “If the American housewife puts the money under the mattress, we’re in deep trouble.”
In a year that seems to be defying all economic expectations, retailers are struggling to plot a course through the make-or-break holiday season, which accounts for nearly 20 percent of their sales each year. Will they have access to credit? How much merchandise should they order? Will anyone buy it? The moves they make now could determine where they stand in January.
The past three months were expected to bring the deepest cuts in consumer spending since the 1991 recession. September’s dire economic news — from the collapse of Lehman Brothers to the freefall in the financial markets to the government’s $700 billion rescue plan — have spooked shoppers and eroded confidence. On the day that the House of Representatives rejected the rescue plan, mall traffic plunged 12 percent, according to research firm ShopperTrak.
Scott and Elaine Bourdeau feel the ripples. The couple, who live in Herndon, had planned to travel to Italy for their 10th anniversary but opted instead to save money with a short trip to the San Francisco Bay area. They’re postponing remodeling their bathroom and focusing on necessities — clothes for their two daughters.