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Savings Experiment: Snow RemovalShopperTrak RCT Corp says that retail sales on Black Friday rose 8.3% according to a report at Bloomberg. "It's an extraordinary number, beyond what we anticipated,'' Bill Martin, co-founder of ShopperTrak, said in an interview with the news service. The research firm says that sales on Friday are usually about 5% of all holiday sales.
What the report fails to say, but should concern retailers, is how much they had to give up on pricing to get customers into stores. If foot traffic was not high enough for some chains, it is likely that they will move prices down on some items again in an attempt to clear out inventory by the end of December.
The National Retail Federation in Washington only expects sales to rise 4% in November and December, a number that is not enough to support any real recovery in the retail sector, which has been hurt by both fuel prices and softness in the housing industry.
If late November sales are running better than expected, it may cause a turnaround in Wall Street's expectation for the holiday and lift shares in companies like Wal-Mart (NYSE: WMT). It would also point to unanticipated strength in consumer spending.
Economists still expect that, if there is a recession, the consumer, who has kept the economy afloat for so long, will lead the fall into negative growth. The theory is that he has simply carried US spending on his back for too long.
What if he actually has the strength to carry it further?
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
11-25-2007 @ 9:11AM
Goobyusa said...
What a load of wishful thinking.
Let's watch as shopping grinds to a screeching halt next week. My family and friends (upper middle class folks) are feeling much less well off these days. They are, as myself, not going to be buying for Christmas. It doesn't make sense to spend money on things when you need gas in your car to get to work and food to eat.
What we have at the malls: Firstly the numbers are inflated (via the media) to entice people to shop. Secondly, people who are charging up their charge cards (ones they took out a second mortgage to pay off) so that they can feel better about life.
Hard times are coming folks. Get your heads out of the sand and try to celebrate what Christmas is really about. It's actually NOT meant to be an opportunity for retail therapy.
11-25-2007 @ 10:52AM
Jonathan said...
To help our economy you can still shop and buy gifts. Just make sure the product was produced in the USA...The money helps the small US firms sends a message and our trade deficit is taken care of by the people and for the people. I have a retail store and also manufacture wooden storage buildings. A huge percentage of my inventory is US produced products, I have eliminated the bulk of cheap imports because of poor quality and Stores like Walmart can buy in such bulk that they drive the prices down and give the impression the small stores are expensive, but maybe the small stores are selling quality and service all of which stays in our economy. I am not an isolationist but do believe we need to send a message to the big boxes that cheap usually translates into poor quality.
11-25-2007 @ 11:31AM
RLi said...
To Gooyusa: My mother told me: "If don't have anything good to say, don't say anything." This apply to you. Can't we take something good at its face value and enjoy it. Why do we have to find the dark cloud hinding behind every silver lining?
It is bad news: Life is an incurable decease. All air breathing organism will die. Lets prepare for death NOW!!!
11-25-2007 @ 11:06AM
helloUSA said...
Good to hear people are still able to get out and shop for gifts. Maybe there are less people living beyond their means than the media lets on.
Hey goobyUSA, Sorry to hear you and you friends are having hard times. I guess your not getting a bonus this year?
I am planning on shopping next week. I usually wait until things slow down a bit.
I aggree with Jonathan, buy USA products if you can. Preferably from Main Street rather than the big guys. You can often find bargains on main street and at flea markets.
Happy Hilidays
11-25-2007 @ 1:46PM
doug said...
A more interesting question is not if more money was spent on black friday but rather if this simply represents an increase in the base of shoppers spending the same amount (or less) or an increase in spending per consumer.
The bloomberg article says the total spending on black friday was $10.3 billion. If this was divided between every man, woman, and child in the US it would be a not so impressive ~$35/person. Taking a somewhat average family of 3 with a median american income of abour $44k this represents a spending of less than 0.25% of gross income. Meanwhile this same average family who saves nothing is spending about 0.27% of their income on any given day.
Every American was not out shopping, but this rough estimate of that possiblity demonstrates that the numbers alone are not that impressive. To know anything useful from this statistic, it is important to know how many consumers were shopping, their income levels, as well as their propensity to consume more this holiday season.
11-25-2007 @ 12:39PM
chris said...
This year I am not buying any gifts nor am I going to set up a xmas tree. GAS for my truck just cost me 85 bucks. I am going to treat this Xmas like it were any other day. My taxes are going up. The interest I get from the bank is going down. Food cost is going to the moon. Eating out is out for me and leaving home to stay in a horrible over priced hotel. That is unless you want to stay in a room that they rent by the hour.
11-25-2007 @ 1:50PM
mike said...
While those numbers are quite impressive, how many days can these numbers be substained? You can't base future sales based on one day, especially numbers that may be somewhat skewed because of increased shopping hours compared to previous years. And at what cost did it take to get these numbers, aka more hours open, deep discounts, more advertising? The sales may be more but that doesn't necessarily translate into more profits. I would like to see the numbers for the whole weekend, not just one day.
By the way, I was out at 5:45 am on black Friday and my observation was fewer cars at stores that in previous years were totally packed at that time of the morning. A Home Depot store had around 10 cars in the parking lot. Not a real "Doorbuster" of a day for them. Most of the items I purchased at the "until 10 am only doorbuster specials" at Staples were still available well after the 10 am time period. I got up early when I could have slept in and still got the "doorbuster specials" I wanted. And it took doorbuster specials to get me out otherwise I wouldn't have went. So if the deep discounts don't continue, the big increase in sales figures might not either.
P.S. I'm just wondering if the increased numbers reported include any sales figures from gas stations. Gas is around 50% more than a year ago.