Staying Alive in a Dead

Staying alive in a dead holiday season: Retail success in 2008

The 2008 credit crisis began in the subprime housing market and spiraled out into the rest of the economy. Home values were decimated; many people lost their jobs (particularly in the financial sector and the construction industry). Older Americans were forced to postpone retirement after their retirement accounts lost value as the stock market collapsed. Many other Americans lost money on what they considered safe investments. Stores such as Macy's and Applebee's were particularly hard-hit because they catered to middle class consumers, who now downshifted their buying to Wal-Mart and McDonald's or simply cut back on all extraneous spending because the security of their jobs seemed so precarious. In contrast, stores that catered to the ultra-wealthy were not nearly as affected because their clientele was less dependent upon salary income and had a more stable source of investment income. The very poor were also not nearly as impacted -- without much ability to engage in discretionary spending in the first place, they often had nothing to cut back on.

Whenever there is a downturn in the economy, stores that cater to middle-income consumers fare the worst. For example, a more recent economic report during an economic downturn found "discount stores and high-end luxury brands faring better than middle-tier stores. TJX, the company behind clothing-discounters T.J. Maxx and Marshalls, notched a 7% rise in sales at store open more than a year. The well-healed seemed ready to weather the slide in job growth: Nordstrom sales gained 8.1%, while Saks sales rose 6%. Meanwhile, at Macy's, sales increased only 1.2%, far short of the 2.3% expected by analysts" (Brown 2012).

Young people, in contrast to middle-class people with families and older Americans, are not invested in the stock market, nor does their immediate financial future depend much upon the job market. They do not own homes in most instances and while teen employment may have been affected by the 2008 recession, for most teens, their part-time income is not their main source of sustenance. Even if their parents must cut back, many items purchased by teens like Twilight books and movie tickets or t-shirts at mall stores like Hot Topic fall into the category of 'affordable luxuries.' "The company scored a tremendous hit by making a savvy licensing bet on Twilight. The four-book-and-film franchise about teen vampire love comes with a built-in audience hungry for merchandise -- exclusively available at Hot Topic" (Rockwood 2009).

Families that might cut back on expensive vacations are unwilling to deny their teens a few extra dollars to buy a t-shirt with the logo of their favorite heartthrob on it. Teens tend to be very fashion-conscious and want to keep up with the latest brands and images like their friends. Parents think little of cutting out going out to eat but do not want their teens to be social pariahs at this critical, special time in their young lives. Particularly during the holiday season, families are determined to make the memory of the year 'special' for their children. It could also be argued that it is more difficult for families with teens to cut back on buying clothing and other items because teens are outgrowing their clothes.