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From The Militant, Vol. 12 No. 49, 6 December 1948, p. 4.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
The decline in retail sales shows little sign of abatement. On the contrary, every section of the country without exception continues to report sagging sales for the fourth consecutive week. These monotonously gloomy reports stress one feature, that the most recent declines have not been as sharp as the previous ones.
For the week ending Nov. 20, department store sales throughout the country were off 6 percent. This compares with previously reported weekly drops of 9 and 8 percent as against last year’s sales.
While fluctuations in the rate of decline are by no means unimportant, the “improvements” reported thus far hardly denote any significant change in the situation.
In the first place, the declines are cumulative. When consecutive weekly declines keep piling up, this fact in itself outweighs such developments as weekly variations of a few percentage points one way or the other.
In the second place, the circumstances attending the recent week-by-week shifts are just as important as the shifts themselves. It is common knowledge that big department stores everywhere have been holding special sales, in many cases store-wide clearances.
Characteristic of the mood among the big merchandisers is a report from the Philadelphia district that top store executives there intend to move their stocks “regardless of promotional expense.” The reference here is not so much to advertising expenditures as to continued price reductions, the sole effective means of pushing up sales in a narrowing market.
What the current figures do not disclose is the extent to which the big stores by their “promotions” have been cutting into the sales of the small and medium retailers. And what is no less important, the degree to which these same sales are cutting into trade that normally follows the Christmas season.
That both of these factors are beginning to play an important role is indicated by reports from the biggest district, the New York area. Specialty store sales here, which are indicative of smaller retailers generally, have been falling off at approximately twice the rate of the department stores. Meanwhile, the stepped-up “promotions” of the big retailers in the last three weeks of November have failed to bring up their dollar volume to that of last year, but have retarded the rate of decline. Their sales for this three-week period show declines of 13 percent, 10 percent and 8 percent.
There is no longer any talk of setting sales records. The question now is: Will it be possible to stay near last year’s levels?
A special N.Y. Times survey, Nov. 28, has the following to say:
“Business forecasters who were making predictions a few weeks ago of a holiday season that would bring dollar volume gains of 5 to 10 percent over last year are now estimating that the aggregate salts of November and December will be doing well to break even with those of last year.”
In plain language, some top business executives are already accepting the initial sag of Christmas sales as indicating a deep-going dislocation of the domestic market. They hope that this dislocation will not prove too severe. If last year’s sales levels can be maintained, then the current developments may be accounted for simply as severe strains, with a few cracks appearing here and there, but with the domestic market as a whole left unimpaired.
On the other hand, a continued sales drop within the range of current declines would mean that inflation has slashed the purchasing power of the masses to the point of severely damaging the domestic market.
The full extent of the actual dislocation remains in doubt because the critical tests – the biggest sales weeks – still lie ahead.
Meanwhile, anxiety and tension in business circles are mounting. This is by no means confined to the stock market, where prices are hovering near the year’s low marks.
According to surveys, 98 percent of purchasing agents are now placing orders on a hand-to-mouth basis, ordering only enough to cover immediate requirements. Drastic measures to trim existing swollen inventories are already in evidence, especially among retailers.
Similar conditions in the past have been accompanied by sizable cutbacks in production, and by lay-offs. But this has not been the case recently, except for hardest hit light-goods branches. Nevertheless rumors of projected cutbacks and layoffs have reached such proportions that the N.Y. Times, Nov. 28, found it advisable to conduct a special survey among the “heavy industries in the New York area” in order to allay all these “scare rumors.”
Typical of the “cautious” attitude beginning to be heard in business circles is a statement issued last week by Richard E. Moulton, director of marketing for General Foods Corporation, one of the giant food monopolies.
“It is conventional,” said Mr. Moulton, “for people to talk about deflationary periods as the time in which purchasing power is reduced to less than that required to effectively consume what is produced. But for some reason they insist on overlooking the obvious fact that the same condition prevails during a period of inflation.”
“In such a period,” he continued, “there is (also) a steady diminishing of consumer purchasing power as prices outstrip the people’s capacity to consume.” (N.Y. Times, Nov. 2)
This simple truth, let us add, is what underlies, the current lag in retail sales.
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Last updated: 28 March 2023