Presidential Election a Time of Uncertainty for U.S. Retailers

Date : 08/16/2012 @ 9:29AM
Source : Dow Jones News
Stock : Saks Incorporated (SKS)
Quote : 15.99  0.0 (0.00%) @ 2:05AM

Presidential Election a Time of Uncertainty for U.S. Retailers

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(This article was originally published Wednesday.)

   By Karen Talley 

Behind the Election Day ads crowding newspapers and overloading airwaves, retailers are concerned about how the battling between Democrats and Republicans will weigh on customers' psyches.

Retailers hate uncertainty, and with the economy sending mixed signals, the presidential election is all about upheaval.

"This fall's presidential election will likely produce an avalanche of negative ads and elevate the uncertainty caused by potential policy changes that could follow the November vote," Target Corp. (TGT) Chief Executive Gregg Steinhafel said Wednesday when discussing the mass merchant's second-quarter results.

"Certainty versus uncertainty is a much better business environment," said David Henry, chief executive of shopping-center owner Kimco Realty Corp. (KIM). "The consumer is the same way in the sense that the uncertainty is impacting their behavior. But once the election occurs, historically, they are more sure."

The comments reflect what may be on other retail executives' minds. However, representatives of Wal-Mart Stores Inc. (WMT), Saks Inc. (SKS), Sears Holdings Corp. (SHLD) and Macy's Inc. (M) are among retailers that declined to comment for this article.

Anxiety may be especially acute given campaigning is occurring during the back-to-school season, the second-largest consumer-spending period of the year behind Christmas. The average consumer will spend $688.62 on children in kindergarten through 12th grade, according to the National Retail Federation.

The election also creates a clash between retailers' spending on advertising, especially broadcast, and candidates' own huge war chests. "This is an issue for retailers and anyone else who depends on getting air time," said Zain Raj, chief executive of Hyper Marketing, a marketing-services firm.

Mr. Raj estimates ad purchases across all media, including broadcast and print, are 18% more costly now than they would be if there wasn't an election.

Political ads are set to cost around $9.8 billion this year, a 63% increase over 2010, according to estimates by research firm Borrell Associates.

Earlier this month, CBS Chief Executive Les Moonves told analysts the broadcaster had received "very attractive pricing" at its annual upfront, when broadcasters typically book the bulk of their business with advertisers. CBS expects political spending to accelerate throughout the third quarter and into the fourth quarter "with record breaking numbers" at TV stations it owns and operates.

While the uncertainty and high ad costs serve as downsides for retailers, electioneering features a lot of rallies that get people into large public areas including mall parking lots. Banner ads festooned across store windows can serve as a draw into stores.

In general, people are pumped up no matter where the rally is, so "they stay out and make a day of it," said Craig Rowley, vice president of retail consulting at the Hay Group.

Retailers also can benefit by selling election-oriented merchandise. T-shirts are always big items, but the theme can be carried further to everything from mugs to separate departments full of assorted election paraphernalia.

Write to Karen Talley at

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