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Retailers Worry About More Than This Season

12:00 AM, Dec 21, 2013 • By IRWIN M. STELZER
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This battle is now taking a new form -- the fight to eliminate the costs of the last mile. Bezos talks of a fleet of drones delivering goods to his customers’ doors almost instantly, and same-day delivery of food.  Cable companies are talking of mergers to create national rather than regional companies, in part to increase their bargaining power with content providers, but in part, too, to meet competition from Internet delivery of films (think Netflix, Apple TV) and other content, and to avoid the fate befalling providers of wired telephone service as consumers increasingly favor cell phones and over-the-internet communication services (think Skype). (Just how larger dinosaurs will be better able to survive is unclear, but never under-estimate John Malone.) In all of these cases revolutionary entrepreneurs are trying to overcome the high cost of going that last mile from the curb into the consumer’s home with packages, entertainment products and communications services, in the process destroying the value of investments of firms taking the old-fashioned route from curb to home.

Traditional merchants do have one reason to cheer --a gift from Ben Bernanke. The Federal Reserve Board chairman and his monetary policy committee decided not to play the Grinch that stole Christmas. Instead of announcing a rapid close-down of the printing presses that have been turning out $85 billion of crisp new currency every month in a program called quantitative easing, the Fed decided merely to slow them down to a $75 billion pace, about where it was when QE2 was beached in favor of the larger QE3. That reduction will not have much of an impact on the season’s sales. Indeed, by removing the possibility that massive tightening would begin early in the new year, the Fed actually encouraged consumers to buy that item that was the marginal one on their Christmas lists.

Bernanke placed still another gift-wrapped policy package under the nation’s Christmas trees. He assured consumers and investors that they can count on near-zero short-term interest rates even when he is succeeded by Janet Yellen, and even if unemployment drops below the 6.5 percent rate he previously said would induce him to raise rates. In short, for the next few years no need to worry about a possible increase in interest rates, at least not until the annual inflation rate threatens to exceed the Fed’s 2 percent target.

Not to be outdone by the Fed, Congress decided to add to the cash available to workers and consumers by easing the spending caps known as “the sequester.” For the first time since 1997 congress passed a budget -- no government shut-down, no fiscal cliff, no sturm und drang, no attack on consumer confidence.

That should help retailers get through this season in better shape than otherwise. But it can’t reduce the force of the gale of creative destruction that is whipping through the retail industry, to the benefit of consumers.

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