Holiday Sales Update

There are a lot of negative headlines out this morning about what appears to be a holiday shopping bust over the Thanksgiving holiday weekend. Several weeks back, the ever-optimistic National Retail Federation (NRF) issued its annual holiday spending forecast calling for a 4.1% increase this year over last. I was skeptical at the time, despite the drop in gas prices, due in part to the NRF's ability to over-forecast such spending over the last few years. What did we find out? The holiday weekend saw the consumer give a black eye to the NRF, or at least the NRF's ability to forecast holiday spending. Per NRF data, sales during the four-day Thanksgiving holiday period fell 11% to $50.9 billion from $57.4 billion, with shoppers spending an average of only $380.95, down 6.4% from $407.02. Tying the two figures together, you may be wondering how the NRF reconciles down 6.4% with down 11%, and the answer is this: a 5.2% year-over-year drop in the number of people who shopped over the four-day weekend to 134 million. Online shopping accounted for 42% of spending over the four-day period, down from 44% last year, with the average number of consumers spent online declining 10% from a year ago to $159.55. This is where I start to pick apart the NRF's findings, because several other reports contradict the trade group's findings. First, over the weekend IBM, said online sales for Black Friday climbed 9.5% over the same day last year. Digital measurement company ComScore also shared its Thanksgiving and Black Friday findings, which more than confirmed IBM's take. Per ComScore, online shopping on Thanksgiving Day saw a 32% gain to $1.01 billion. This marked the first time in its history that online shopping on that day surpassed the billion-dollar threshold. Moreover, it was the first day of the 2014 season to break through that level. Turning to Black Friday, Comscore saw the online spending surge continue with $1.51 billion in desktop online sales, up 26% from Black Friday 2013. Simply put, this casts some doubt on the NRF's online data. Another issue is the implied drop in weekend shopping, when we match the NRF's findings with that of research firm ShopperTrak. ShopperTrak estimated that sales at brick-and-mortar retail stores came to about $12.29 billion on Thursday and Friday, compared with $12.35 billion spent during the same two days last year. That is a drop of roughly 0.5%, which means holiday shopping over the weekend had to fall off a cliff, or else. The bottom line is there always tend to be a number of forecasts, but what separates the forecasts you pay attention to vs. the ones you don't are the track record and corroborating factors. In this case, at least to me, it looks increasingly like the NRF needs to overhaul its forecasting methodologies to better capture data and reflect shopper preferences. While I may sound like a broken drum, the data from both IBM and Comscore paint a very positive picture for my online shopping trifecta ¿ Amazon.com (AMZN), Visa (V) and United Parcel Service (UPS). As I mentioned in last night's The Week Ahead, my concern for brick-and‑mortar centric retailers -- think Urban Outfitters (URBN), Sears (SHLD) -- has started to shift from sales to both sales and margins.

Holiday Sales Update

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