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From a post on my board on the FOOL.
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In the past few weeks and since Thanksgiving many discount retail chains like Wal-Mart, K-Mart, Target, Kohls and a lot of department stores that cater to the middle class have reported somewhat disappointing sales at the low end or below expectations. And of course the talking heads on CNBC, the Monday morning quarterbacks that we are all so used to, come on the tube and explain to us all that people are just not buying as many gifts, and we are supposed to accept that.
But I just can't buy that. I have my own theory when it comes to lower ratail sales dollars this holiday season. I think that the overall prices for gift items have dropped. People are just buying as many gifts, may be even more. But they are just not spending as much on them. They don't have to. Here are some examples of popular Christmas items that have dropped in price:
Music CDs: Vivendi Universal dropped music Cd prices to below $10 a coule of months back and anothe major publisher followed suit 2 weeks ago. Most new release CDs are no2w $9.99 or less vs. $12-$16 a year ago.
DVD Movies: Target and Circuit City sell all newly released DVDs for $14.99 the first week of release. DVD prices have generally dropped by 10% to 20% since last year.
DVD Players: The cheapest models are down from $80 a year ago to below $40 this year.
Digital Cameras: prices have dropped by as much as 50% since last year.
Home Furniture: Price drops have been dramatic due to cheap and high quality Chinese imports.
Wine: 2 Buck Chuck, anyone? Wine prices have plummeted since a year ago. And the $2 bottles are darn good.
cbsnews.com
Sporting Good: Again prices are dropping due to onslaught of the cheap but high quality Chinese makes.
Greeting cards, gift wraps and bags I have touched on this before but if you want to buy them about 75% cheaper than Hal-Mark and American Greetings, then take a trip to your local dollar store. You will never go back to Hal-Mark again. Again all are cominf from China.
Those are things that come to my mind right now but I am sure you can think of many other items that have dropped in price since last year and kept the quality the same. And in most cases, if you read the label, the words Made In China will be there. Just look at all the clothing items.
Of course, stores like Wal-Mart, Target, and other department stores do sell the same items. People buy the same or more number of gifts at lower prices per gift, resulting in lower overall sales. In case of Chinese made goods, overall margins improve since costs are incredibly low, but overall profits drop.
Mehran |
