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Jingle All the Way

Retailers are expecting a big Christmas season. Will they be zooming into the black?

11:00 PM, Nov 17, 2003 • By IRWIN M. STELZER
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BUT EVEN MIGHTY WAL-MART saw its margins fall last month for the first time in five years, and soft-goods retailers such as department stores continue to see consumers looking for real value for money. Prices of big ticket items also remain under pressure. General Motors has responded to a 7 percent decline in October sales and rising inventories by increasing rebates on its big SUVs to $3,500 (a $1,000 jump). Alternatively, consumers can get 48-month loans with no interest charged. And margins on the giant, 50-inch television sets that have captured consumers' fancies, even at prices well above $5,000, are far below those on, say, some stereo equipment, and are expected to fall as production increases and Wal-Mart gears up to sell these sets.

Still, most analysts are guessing that low inventories of many goods will enable retailers to be better able to hold the line on prices than in recent years. If they are right, and consumers postpone the chore of whittling down the size of their debt mountain until after Santa Claus has returned to his North Pole lair, retailers might join the manufacturing and service companies that are participating in the current profits upturn.

Irwin M. Stelzer is director of economic policy studies at the Hudson Institute, a columnist for the Sunday Times (London), a contributing editor to The Weekly Standard, and a contributing writer to The Daily Standard.