Scroogenomics

AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Every year economists come out and opine on Christmas and the future of retail. Wharton professor Joel Waldfogel with his book "Scroogenomics" has been an oft-quoted tome by the family Scrooge who eschews giving presents. Don't get me wrong, the self same Scrooge does give cash and the occasional gift card, both of which are preferable to ugly sweaters, socks, or worse the pink bunny outfit from "A Christmas Story."

Bricks and mortar retailers must quake in their boots when Waldfogel comes under discusssion. Fear not, intrepid retailers, economists aren't the last word in gift giving. In an NPR anecdote for Marketplace economist Alex Tabarrok took the whole Scrooge theory to its ultimate conclusion buying his wife a DVD player (the brand and model he wanted) probably rationalizing it to her as something they could both enjoy and a few months later Mrs. Tabarrok bought him a dress for his birthday. Well done, Mrs. Tabarrok.

What bricks and mortar retailers should really worry about is Amazon.com  (NASDAQ: AMZN) . What's listed on Amazon after the Scroogenomics book "what other items do customers buy after buying this book?" Surprise, surprise, Amazon gift card Christmas tree design and Amazon gift card print at home version. Too funny.

Ghosts of Christmas Past

Retailers probably look fondly at the past as Scrooge did upon the merry days of his apprenticeship at Fezziwig's counting house. Long before "showrooming" and websites and having to spend on a social media presence, retailers enjoyed their glory days like Sears and their catalogues and J.C Penney being the family store. Gone, all gone. The department store where once the middle class shopped for almost everything except drugs and food is gone, the only reminder of its former glory some of the older Macy's stores. Macy's (NYSE: M) thanks to prescient CEO Terry Lundgren was able to keep up with the times with social and internet and localizing to customer preferences.

Ghosts of Christmas Presents

Retailers are likely seeing the shadows of the future as Scrooge watches a consumptive Tiny Tim soldiering on. EBay and Amazon are giving them a run for their money, handicapped as they are with rent, salespeople, and fixtures. The best bricks and mortar stores are hedging their bets with online commerce and embracing tech like digital wallets.

This present season, Nordstrom (NYSE: JWN) has seen the future and equips salespeople with iPods to divert inventory to their store if a customer requests and also speeds up the checkout process. Similarly, large retailers like Macy's and Home Depot have partnered up with eBay (NASDAQ: EBAY), another bricks and mortar disrupter, to use its PayPal to check for best prices and match them and pay with PayPal on their mobile. Google (NASDAQ: GOOG), not to be outdone, also offers Google Wallet for mobile use. Apple also has a digital wallet Passbook for iPhone users.

Ghosts of Christmas Future

As the trend to gift cards expands every year (no bulky presents to carry to the Cratchits) a San Francisco startup (and aren't they all in Frisco these days) has made gift cards even easier with an app called Gyft financed by Google Ventures. It allows mobile users to buy a gift card, even from Google competitor Amazon, and send it to a friend's mobile or even regift a card.

More than three quarters of shoppers are buying a gift card this season, me too, and bypassing all  that gift wrapping and unwrapping of yore only to see the disappointed faces of loved ones.

Soon Mr. Scrooge can just Gyft that roast goose and presents to the Cratchits and then they can sit in front of the meager fire and regift each other. Sweet.  Even if it is Christmas Day and all the “mongers” are closed Mr. Scrooge can get an Amazon card to Tiny Tim. Last minute shoppers, rejoice!

Keeping Christmas 365 Days of the Year

Ebenezer certainly had an attitude adjustment thanks to partner Jacob Marley and the Three Ghosts of Christmas. If bricks and mortar stores can't get with the mobile and web program, just like Scrooge they'll see a tombstone with their name on it among the names of other retailers of the past like Montgomery Ward and Circuit City.

The moral of the holiday tale is that Google, Amazon, and eBay will continue to be buys for many Christmas futures to come. Amazon is still to my mind the ultimate e-tailer despite the P/E (and how many times will I have to write that before the P/E of 2,997.14 comes down to an Apple level?).

Google is performing well recently but eBay is a name I wouldn't mind as a present to my portfolio with its P/E at 17.71 just slightly higher than Nordstrom at 15.85. If you are a value and yield investor you'll have to shop at Macy's and Nordstrom for their 2.00% and 2.10% respective yields. Your portfolio will feel like it's Christmas every day.

 


leglamp has no positions in the stocks mentioned above. The Motley Fool owns shares of Amazon.com and Google. Motley Fool newsletter services recommend Amazon.com, eBay, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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