What if you were a retailer and had a sale, but nobody purchased anything from you? That's the very real scenario facing retailers this holiday season and it could lead to many retailers going out of business after the season is over. This means that holiday shoppers need to be more careful than ever when selecting gifts or purchasing gift cards. If you make the wrong purchase, you may not be able to take it back. And if you buy the wrong gift card, it may not be worth the plastic it's printed on.
For the first time in more than a decade, retail analysts expect Americans to make fewer purchases this holiday season than they did last. It's no wonder. Job losses are up - Citigroup recently announced that it would eliminate 52,000 jobs on top of the 23,000 it had already announced - and more are on the way. And lenders are not lending. This means that the chances of you refinancing your house to purchase a shiny new car as a gift for that someone special are much smaller this year.
With millions of American families facing foreclosures, job losses and just being generally worried about the economy, holiday giving this year is going to look a lot different than in years past. And because of this, shoppers need to be a little more cautious about where they shop and what they buy this year. At the same time, it should be pointed out that there are going to be a lot of bargains that educated shoppers should be able to take advantage of this year too.
Gift cards
Gift cards are the single most popular gift that Americans give. This year, they may also be the riskiest.
There is a long list of retailers that have gone out our business within the past year, and there are even more that are still in business but in trouble. Circuit City (closing more than 100 stores) and the Bombay Company (already out of business) are just two examples.
When the Bombay Company filed for bankruptcy, it stopped accepting gift cards. In fact, the bankruptcy court had ordered them to stop accepting their own gift cards. This is fairly typical of retailers that find themselves in bankruptcy. It means that if you are thinking of purchasing a gift card for someone this year, you need to make sure that the company you are buying from is financially sound. That may be harder than you think.
Just because a retailer has a well known name and a lot of stores doesn't mean that they are financially healthy. Some companies spend millions of dollars on advertising and are well known throughout much of the country. Even so, many of these chains are in financial difficulty. This means that if you buy merchandise, you may get a good deal. But if you buy a gift card, you may get nothing other than the card if the chain goes under.
The best advice we can give you this year is to avoid gift cards altogether. If you can't do that, you may want to consider buying something like an American Express gift card or check. These can be used at most retailers and won't tie you or the person you are giving the card to a particular store or chain.
Merchandise
The warning about gift cards can also extend to merchandise. If you are planning on giving gifts that you know may need to be returned or exchanged, be careful about where you shop. If the store you purchase from goes out of business, the recipient of the gift may be stuck with what you give them. This could be an especially big problem when it comes to clothing.
Extended Warranties
If you are buying electronics this season, make sure you read the fine print on any extended warranties that you consider buying.
Most electronics are sold with a limited warranty that comes standard. These warranties usually include a window of time to return the item unopened, and widow of time to exchange the item for an identical item if it is broken, and then a repair period where, parts, labor or both are covered. But most stores will offer you the opportunity to purchase an extended warranty that could last for several years.
If you purchase one of these warranties, you need to know who the warranty is through. It could actually be the store that is selling you the item, the manufacturer or an insurance company. There are risks associated with any of these.
As we've seen over the past month, even insurance companies can have financial problems. The same is true for manufacturers. Even so, both of these options are probably better than purchasing a warranty that is issued through the store you are buying from. Just make sure that you ask a lot of questions and have the salesperson show you who in writing who is issuing you the warranty.
The truth is that short of giving nothing but homemade gifts this year, there is probably little that anyone can do to avoid some risk in their gift giving. But with a little planning, you can minimize your risk and probably find some very good deals this holiday season.
By: Guest Blogger: Jim Malmberg
For the first time in more than a decade, retail analysts expect Americans to make fewer purchases this holiday season than they did last. It's no wonder. Job losses are up - Citigroup recently announced that it would eliminate 52,000 jobs on top of the 23,000 it had already announced - and more are on the way. And lenders are not lending. This means that the chances of you refinancing your house to purchase a shiny new car as a gift for that someone special are much smaller this year.
With millions of American families facing foreclosures, job losses and just being generally worried about the economy, holiday giving this year is going to look a lot different than in years past. And because of this, shoppers need to be a little more cautious about where they shop and what they buy this year. At the same time, it should be pointed out that there are going to be a lot of bargains that educated shoppers should be able to take advantage of this year too.
Gift cards
Gift cards are the single most popular gift that Americans give. This year, they may also be the riskiest.
There is a long list of retailers that have gone out our business within the past year, and there are even more that are still in business but in trouble. Circuit City (closing more than 100 stores) and the Bombay Company (already out of business) are just two examples.
When the Bombay Company filed for bankruptcy, it stopped accepting gift cards. In fact, the bankruptcy court had ordered them to stop accepting their own gift cards. This is fairly typical of retailers that find themselves in bankruptcy. It means that if you are thinking of purchasing a gift card for someone this year, you need to make sure that the company you are buying from is financially sound. That may be harder than you think.
Just because a retailer has a well known name and a lot of stores doesn't mean that they are financially healthy. Some companies spend millions of dollars on advertising and are well known throughout much of the country. Even so, many of these chains are in financial difficulty. This means that if you buy merchandise, you may get a good deal. But if you buy a gift card, you may get nothing other than the card if the chain goes under.
The best advice we can give you this year is to avoid gift cards altogether. If you can't do that, you may want to consider buying something like an American Express gift card or check. These can be used at most retailers and won't tie you or the person you are giving the card to a particular store or chain.
Merchandise
The warning about gift cards can also extend to merchandise. If you are planning on giving gifts that you know may need to be returned or exchanged, be careful about where you shop. If the store you purchase from goes out of business, the recipient of the gift may be stuck with what you give them. This could be an especially big problem when it comes to clothing.
Extended Warranties
If you are buying electronics this season, make sure you read the fine print on any extended warranties that you consider buying.
Most electronics are sold with a limited warranty that comes standard. These warranties usually include a window of time to return the item unopened, and widow of time to exchange the item for an identical item if it is broken, and then a repair period where, parts, labor or both are covered. But most stores will offer you the opportunity to purchase an extended warranty that could last for several years.
If you purchase one of these warranties, you need to know who the warranty is through. It could actually be the store that is selling you the item, the manufacturer or an insurance company. There are risks associated with any of these.
As we've seen over the past month, even insurance companies can have financial problems. The same is true for manufacturers. Even so, both of these options are probably better than purchasing a warranty that is issued through the store you are buying from. Just make sure that you ask a lot of questions and have the salesperson show you who in writing who is issuing you the warranty.
The truth is that short of giving nothing but homemade gifts this year, there is probably little that anyone can do to avoid some risk in their gift giving. But with a little planning, you can minimize your risk and probably find some very good deals this holiday season.
By: Guest Blogger: Jim Malmberg
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