It looks like we may have talked ourselves into an overly gloomy outlook for this year's holiday sales. Maybe that was the plan all along -- to depress expectations so much that it would be much easier to exceed them. And it looks like that's what happened -- analysts expected sales to rise 1% in the November/December 2008 shopping season -- and actual Black Friday results were up 3%.
Granted that's not an apples to apples comparison but the International Council of Shopping Centers predicted a 1% rise in same store sales this November/December shopping season and it has already revised its forecast upwards to 2%. For Black Friday, the 3% sales increase amounted to $10.6 billion in sales.
And there were some significant differences across different regions. The South gained the most, 3.4%, over 2007 while in the Northeast sales rose the least, 2.6%.
Nevertheless, other analysts remain gloomy. ShopperTrak has estimated that 9.9% fewer shoppers will descend on stores this November/December shopping season, producing a sales gain of 0.1%. And Gallup suggests that the average individual will spend 29% less, or $616, compared to 2007.
If things turn out better than expected for the fourth quarter, some retailing stocks should rise. And since gasoline prices are down at least 50% since July and some mortgage rates have fallen, those with jobs have more to spend than before.
And many of those who fear they'll lose their jobs may decide to enjoy the holidays while they still can. Next year might not be as good.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.
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Reader Comments (Page 1 of 1)
11-29-2008 @ 6:29PM
Danny L. McDaniel said...
Black Friday just proves that Americans are financially over-extended and have an addiction to credit cards. Many of those credit cards still have charges from the past several Christmases attached to the balance.
Americans shouldn't worry they have China to bailout us out.
Danny L. McDaniel
Lafayette, Indiana
11-29-2008 @ 8:41PM
LB said...
I wish I understood these numbers a little better. I am a small business/retailer with 2 stores and a website with total sales of around $2M.
I can certainly say that our numbers were down dramatically this year (for the first time in many, many years). That did not surprise me. What does surprise me is the concept that sales were up 3% this year. Also curious how we can have 9.9% less shoppers and each shopper is expected to spend 29% less than last year and yet sales are expected to rise .1% for Nov/Dec. Is this an inconsistancy or am I missing something?
11-30-2008 @ 1:01AM
jen said...
I was in 2 malls yesterday and today and they were dead . Plus, prices were higher now than 1 month ago . Media propaganda . There's no way sales were higher by 3 % this year than last .
11-30-2008 @ 7:38AM
kanemochi.135 said...
They are talking about 29% decline on gifts.
This means they have to spend more on non gifts in order for the sales to increase.
To believe in this assumption one has to drink too much wine during holidays ...
11-30-2008 @ 5:18PM
renee said...
Thank goodness for my wine!
11-30-2008 @ 4:17PM
John said...
3% rise in sales..... but at what cost? If i owned a business I can theoretically boost my sales proportionately to the amount that I discount my goods.... but that drives down my margins and my NET EARNINGS, despite an increase in revenues.
I think it is important to note that heavy discounting to boost overall revenue does not take into account actual EARNINGS.
11-30-2008 @ 6:54PM
ODIEX said...
i agree on the addiction on credit cards and i also from what i seen early in walmart friday 5.00am it looked like christmas eve ..as i got my dr. pepper and peanut budder cups..(: thats all i bought and waited behind big screen t.v.s and such high price things ..even here in Houston /Galveston area we were hit by Hurricane IKE!! that almost wiped Galveston of the map.. and people with still no homes to live in even my neighbors have galvestonions living with them..and down here we are starting to feel the unemployment inching up from 5.1 to 5.7 ..my wife is a teacher and im an ol pipe welder..cant type either(: but yea i dont think reality has hit yet ..We have a time making our mortgage and yes we are underwater too.Citibank hits use more and more on late charges but we pay them.Now the home owners ass. doubled their Yearly shit ..oh we enuff about that cya..
12-01-2008 @ 5:48AM
robert chilingirian said...
I was in Old town Pasadena yesterday, Sat. night when in the past you could not even get a parking spot, had to wait on line for restaurants etc..But that was not the scene at all...Every singl erestaurant was 90% empty, so were the sidewalks and the parking lot...There were mannnny spots available...What are these people talking about?? Are they talking about the U.S?? or maybe Dubai?? Helllooo!!