I agree with Doug; it’s best to wait, but I’m going to wait until about the end of January to make my prediction. With a lifetime in the business of trying to guess what consumers will do during the holiday shopping season, I decided two years ago that making such a prediction was crazy. I, along with most others, have nearly always been wrong. I deeply respect the NRF and the work they do but their predictions are usually far too optimistic. And the ICSC clearly has a bias toward stores based in shopping centers. A few weeks ago, one consultant predicted this would be the first holiday shopping season with negative numbers. While he got lots of media coverage, I wonder if his prediction will actually make any difference to anyone? While these predictions make for great media stories, holiday shopping is today, at best, a fragmented business. Some consumers begin shopping as early as August; others do much of their shopping around Thanksgiving; others do their shopping online; and still others wait until… Read more »

For those who don’t know, my comments refer to retailers in England rather than the US. That said, there are both similarities and differences. This year, for a variety of reasons, I have been looking firsthand at far more retailers in more locations than I have for a long time. I’ve been in and out of malls, department stores, quirky independents and big boxes (or at least their parking lots – didn’t have the energy to actually go inside and trudge around). Bottom line is that there is no general conclusion to be drawn. In London last weekend, Oxford St was made a traffic-free zone for the first time in many years and the crowds absolutely flocked in. I don’t know if anyone has analysed who those people were though – many Oxford St shoppers tend to be tourists as most of the stores (apart from Selfridges) sell tat. Most people who live in the UK, I think, prefer to do their serious shopping elsewhere. In Brighton last week, the busiest store I saw was… Read more »

This is clearly going to be a good holiday season. Anyone who is ignoring the early results is confusing the accuracy of past predictors. Black Friday results were good, and all of the other indicators predict a good holiday sell-through. It is difficult to determine whether it will be 3% above last year, or 6% above last year, but it will certainly be above last year. I would consider 3% the minimum levels of growth, with a possible upside moving to the 5% end. We should see all of the big box stores and major food and drug coming-in ahead of last year. Expect Wal-Mart to be leading the pack, since they stumbled last year.

My thumbnail survey (which is far from scientific) indicates that sales of lower cost and deeply discounted items were ahead at Black Friday, but full price and higher end goods were slow until this week. Look for sales to be ahead of the last few years, but with significant hits to margins. Sales will be good because consumers are feeling optimistic in spite of fuel costs, the war, and natural disasters. Maybe we are just tired of being down?

The discrepancy between the two forecasts may be a result of the strength of off-the-mall players such as Best Buy. As to the degree of promotional activity driving sales….I’m not sure it’s significantly different than previous years. One trend we as industry pundits may be blind to is the increasing awareness and effective communication of promotional activity. Black Friday and its discounts, Cyber Monday and its range of offering….all received press in and off themselves. We have made Black Friday into an EVENT. This focuses attention on the traffic drivers used by various players for that EVENT. We are in the information age, right? This makes information more readily available – like promotions. That aside, the gross margin forecast will be a function of the planning done for those promotions, not simply the fact of them. If WM planned to take deeper discounts going into December, and to highlight key items and categories, then they probably bought the merchandise with that in mind. If the promotional activity is the result of accumulating and stagnant inventory,… Read more »

It will clearly be an uneven sales season. Out and about this week saw Best Buy, Circuit City and Wal-Mart parking lots full. Not a problem getting a space at the mall. I would be surprised by anything over 3% and I expect margins to decrease for two reasons. First, by mid-week, promotions will heat up as there is a lot of inventory on the sales floor. Second, there is great growth in gift cards. The problem with gift cards is they are redeemed for merchandise on promotion or close-out. Internet sales will be up, but this is more transfer from one channel to another. Retailing is never easy, but I expect a few more bankruptcies by the end of the first quarter.

I am continuing my pledge on not predicting this year’s holiday results until early January. I will say that I was at a Simon mall on Friday night and was almost shocked at how slow it was. My wife asked that we go over there and I reluctantly went thinking I would be fighting traffic and mall crowds. I never experienced either.

I think the toughest part is going to be making up for a weak November. Many of our clients and retailers we know are having a decent December but still not sure they’ll make up for the soft November. I guess this week will tell. I’ll definitely let you know when I make my annual prediction in early January.

Excluding auto sales and gasoline, I believe that retail sales November through January will be up around 3% versus last year. That increase will not pay for the increased overhead (shrink, advertising, utilities, compensation and benefits, rents).

Furthermore, the Darwinian march towards lower gross margins has continued, so overall profits will be worse. The internet reduces margins, even if the retailer isn’t online, simply because some of the competition is online. Retailing’s product mix is headed towards lower-margin categories, such as food and electronics. Traditionally, better margins are achieved in clothing, but the Asian imports are largely producing deflation, especially for shoes. And clothing styles aren’t innovative enough to produce big sales increases, except for less than a handful of chains, such as Aeropostale and Abercrombie & Fitch.