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With every TV station and consumer publication lamenting Christmas sales, you’d think they were down more than the one to two percent that was reported, particularly since sales had been plummeting for the three prior months.

It makes no difference now, because the damage was done well before Xmas 2008. For instance, department stores had ratcheted up price points for five years, already displacing most middle class customers. What occurred this holiday was a huge reality check, like taking a test drive off a cliff to see if a Hummer can fly.

The cosmetic business pursued a luxury and celebrity audience, a demographic that had already drastically declined prior to the Wall Street meltdown. The financial disaster then leveled the wealthy who shopped at Saks Fifth Avenue and Neiman Marcus.

But who will pay for these dramatic markdowns? This will be the 64 million dollar question? Department stores and their vendors will now battle who actually absorbs these markdowns. Brands have suffered immeasurable damage. We do not know if pricing can be restored, or in this new reality, will all price points be adjusted downward?

And which vendors will survive? It would appear that a number of newly-downsized department store chains will have to find new vendors to replace those who may not survive in this retail environment. The Informationist is now analyzing the new reality for our readers.