Inconsistencies with Black Friday figures

By DAVID MOON, Moon Capital Management, LLC
December 4, 2011

I ventured out twice on the dreaded Black Friday – both times during normal people hours and both times to Walmart. Each time was difficult. Not because there were throngs of people; there weren’t.

It was difficult because there were no sales associates around to help me. The store seemed almost deserted.

I suppose everyone finished shopping sometime around midnight so all of the employees went home.

The National Retail Federation says my shopping experience was the exception. It has determined that consumers spent $52 billion last weekend, an increase of 16 percent from a year ago.

This data is based on surveys the Federation conducted, not actual sales data. I am willing to concede that retail sales will increase this Thanksgiving weekend compared to a year ago, despite my strange Walmart experience. Maybe no one goes to Walmart anymore. Or maybe they all go at midnight armed with cans of pepper spray anxious to fight over a video game.

But I am struggling to see a massive increase in spending this year.

The unemployment rate is currently 9.1 percent, compared to 9.8 percent a year ago. There are about 1 million fewer unemployed persons from a year ago, so that obviously has a positive impact on retail sales.

However, the Institution for Social and Policy Studies reports that half of the country is concerned that they won’t be able to buy the gifts they want for family and friends this season.

That’s inconsistent with a 16 percent jump in initial holiday sales.

Each year, more retail sales are being shifted into the four-day Thanksgiving weekend, cannibalizing sales away from the rest of the year.

According to the U.S. Census Bureau, the percent of annual retail sales (excluding autos) that occur in November increased 10 percent from 2008 to 2010. A 16 percent increase in 2011 Thanksgiving weekend sales is a positive sign for retail, but not as strong as a casual glance might suggest.

That day – and the entire weekend as a shopping event – has taken on a life of its own. It hasn’t always been this way.

It was only ten years ago that Black Friday became the largest retail shopping day in the United States. Despite Black Friday folklore, prior to 2002 the largest shopping day was the Saturday before Christmas.

It’s hard for me to believe that all of the October Christmas decorations and Black Friday promotions increase the total dollar amount of Christmas sales. I assume it does, because those Madison Avenue people and their clients are really smart.

It isn’t logical, however, that the amount of money people spend is significantly impacted by when they spend it, especially if they are fighting with some fat redneck guy in the middle of the night for a Tickle Me Elmo doll.

***

In my column last week, I completely butchered Thomas Gray’s quote about ignorance being bliss. Being from Alabama, I should have known better than to quote 18th century British poets from memory.

David Moon is president of Moon Capital Management, a Knoxville-based investment management firm. This article originally appeared in the News Sentinel (Knoxville, TN).

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