Sensitive season

Red, white, and blue Christmas When everyone else is planning for Fourth of July, retailers plan for Christmas. But this year, many retailers' early plans are changing, as the Sept. 11 terrorist attacks have forced them to adjust holiday product, marketing, and even decorating plans, according to a New York Times report. Violence, for example, is out (see "War games," p. 14.) Retailers are scouring marketing materials with an eye for sensitivity and appropriateness: New York-based Saks Fifth Avenue, for example, removed its "Live a Little" slogan from ads, both out of respect for those who died and a sense that the phrase's pleasure-oriented, materialistic tone might offend. Other stores are dumping ironic, cynical, or overly acquisitive themes in favor of warmer, more traditional Christmas messages. Meanwhile, merchandising specialists predict red, white, and blue will dominate store windows and mall displays. "You can be sure the overriding theme in the stores will be patriotic," said Wal-Mart's Tom Williams of his firm's plans. "The stores will have the Christmas theme, but it will be very clear that the country is aware of itself and aware of what's at stake." War footing War has always led to unexpected business problems, and the war on terrorism is turning out to be no exception. For example, households northeast of New York City have deluged one cable-television provider with reports of severe channel interference. Seems the government's increased use of radar is disrupting signal transmission. Beyond technical inconveniences, National Guard and reserve call-ups already are opening work force gaps and, according to Gartner Group analyst Dan Miklovic, supply chains may grow "lumpy" as a war effort draws heavily on specific materials. Still, a wartime economy emerging from a U.S. assault on terrorism isn't likely to mirror past war economies, Mr. Miklovic said. Among concerns that will be new to American companies: Is a firm's Internet service provider sufficiently secure? Will war disrupt critical satellite and digital communications, such as cellular phone service? For companies competing in international markets, how will a war on terrorism affect the Euro conversion? Almost any facet of a wartime economy is beyond the institutional memories of many firms in existence today, particularly technology start-ups that opened their doors in the 1990s. Feeling their pain The growing bonfire of life, property, and casualty claims against insurers in the wake of the 9/11 terrorist attacks may singe banks as well. For the last two years, since the Financial Services Modernization Act of 1999 (FSMA) tore down the iron curtain separating banks, insurers, and securities firms, banks have been able to dabble in insurance and insurers in financial services. When FSMA passed, some analysts said banks would leverage their customers' trust, write reams of life and health policies, and snatch market-share from less-trusted insurers. Others said insurers would use their enormous financial reserves to open full-service financial institutions, employing a one-stop shop appeal to lure clients away from traditional banks. Two years later, neither forecast proved true. While banks are selling some insurance products and insurers have opened a few banks, neither has encroached mightily on the other's territory, according to a September report in Best's Review. But there's still potential for banks sharing in insurers' losses. Take annuities: While banks in the post-FMSA era have had some success selling them, annuity sales (already battered somewhat in 2000) could dip further in the wake of the terrorist attacks, which could affect banks' fee income, according to The American Banker. Meanwhile, banks looking to add property/ casualty insurance or new carriers to their offerings could find doing so more difficult as attack-related losses mount. Industry analysts now estimate property and casualty loss estimates at between $15 billion and $50 billion.