Media Wrong Year After Year on Retail Holiday Sales
By Tom Ryan
Bob Phibbs, president
and CEO, The Retail Doctor and a RetailWire BrainTrust panelist, has
published a white paper predicting that the general news media will yet
again forecast a depressing Black Friday and holiday retail sales declines
next week as they have for the past 10 years – even when there were positive
increases. The report also details the retail risks of such early doom-and-gloom
thinking.
In his report,
Mr. Phibbs chronicles how inaccurate past reporting from prestigious
news organizations has been. Some of these headlines include:
- The
New York Times, 2001: Desperation
Sales Fail To Lure Shoppers (2001
Holiday Sales Increase = +3.4 percent) - CNN
Money, 2004: Holiday
Weekend a Turkey for Stores (2004
Holiday Sales Increase = +6 percent) - The
Wall Street Journal, 2007: Data
Point To Weak Holiday Sales (2007
Holiday Sales Increase = +2.2 percent)
“This annual
merry-go-round of doom and gloom spin is all about selling news and earning
retail industry experts and officials airtime for their own ego and profit,” said
Mr. Phibbs in a statement. “It doesn’t sell merchandise nor does it encourage
optimism by retailers and consumers alike. Instead, it creates a “waiting
for the next shoe to drop” mentality to set in among consumers (who hold
back their wallets to wait for deeply discounted bargains) and retailers
(especially the small and independent ones) who hold back their buying,
expect the worst and cut prices – thus limiting their profit potential
during the important holiday season.”
Regarding price-cutting, Mr. Phibbs provides a historical lesson from
The Great Depression on how slashing prices added to the frenzy and lowered
the quality of goods and services. It ultimately hurt retailers’ sales,
their reputations and did nothing to fuel an economic recovery.
Mr. Phibbs also
provides positive reports from credible sources about this holiday season
that predict an increase over the dismal sales of 2008. The reports
are supported by tracking of decreasing inventories and overhead
cost cutting adjustments over the past year that negate the need for heavy
discounting.
Mr. Phibbs’ advice to retailers ranges from turning off all electronic news media to optimizing retail staffs to engage customers beyond their expectations.
“This is your
moment to grab market share and make an impression that your customers
will remember forever,” said Mr. Phibbs. “Consumers have low expectations
and your competitors are cutting everything to the bone. The opportunity
to over deliver a positive memory of all of your measurable and intangible
brand touch points has never been greater, and optimum execution will build
customer loyalty for years to come.”
Discussion
Questions: Has the news media been overly pessimistic in predicting
holiday retail sales over the years or is it simply reporting
what industry sources say will happen? Do you think this year’s
reporting has been sensationalistic or representative of the
common wisdom? What repercussions does reporting have on business?
It should be noted that it’s not the media conducting research that predicts sales will be down for the holiday season. One of the gloomier predictions this year came from the National Retail Federation, which said sales will decline one percent for the holiday season. That’s off of a really bad 2008 and a low base. I know that mainstream media doesn’t always get the nuances down because they don’t live and breathe this stuff the way we do, but unless they have people from within the industry providing an alternative perspective, then it’s not going to happen. When it comes to the media, the garbage in, garbage out rule always applies.
Clearly the retail sales from the last few months point toward a “less bad” Christmas than in 2008, and in some cases we can expect to see positive comps against very tough comparisons. Bob makes a valid point that the overall sense of economic gloom will hang over reporting about retail sales, but keep in mind that some of that gloom is justified by an extremely high unemployment rate and overall sense of anxiety. I’m sure we will also see fewer “visuals” of crowded store openings on Black Friday, driven largely by Walmart’s decision to open a day early. The national mood is not good, but we should expect to see at least a flat holiday shopping season…not a disaster.
The prediction of low sales is a creation of the media, and what’s worse, can also become a self-fulfilling prophecy in fragile times like these.
What’s more, several news outlets appear eager to say anything to disparage the current administration.
One of my partners was on a major “news” network last week, ostensibly to talk about various retail stock results. What the story turned into was “Is Wall Street too Bullish on Retail?”
Even the Wall Street Journal has stooped to sensationalist reporting. I was never a fan of the WSJ’s politics, but the reportage has gotten pretty sloppy in the past couple of years, especially when it comes to retail. It’s not right wing or left wing…just wrong. It’s a Murdoch property now.
Not to put too fine a point on it, but I find it really offensive.
It’s easy to blame the news media for the country’s economic ills. There’s little harm in doing so and no retribution if one is wrong.
I’d prefer to focus on the last bit of advice Mr. Phibbs offered in the article: Retailers that focus on customer service and exceed customer expectations can deliver a positive memory that will benefit the retailer for years to come. That is where retailers should focus their attention his holiday shopping season.
With many retail staff members being short-timers, it will be difficult for store managers to instill this message. But those who do will be rewarded by increased customer loyalty and positive word of mouth, the most powerful advertising vehicle of all.
First, congrats to our fellow BrainTrust panelist Bob Phibbs, for some good thoughts about the media trends in predicting retail results. I do believe that what people read in the news and hear on TV has sort of a fulfilling effect on the outcome itself. However, if “Black Friday” underachieves this year, I believe the reason will be every bit as much retailers’ own self-fulfilled prophecies and the underwhelming approach taken this year to stock only what people “need,” and not what they “want.” Fact is, the “want” has not gone away, and especially not for the holidays, and I hope that product assortment for this season will be fulfilling to holiday shoppers.
Uncertain retailers will always talk themselves into trouble. When so prone, media can scare consumers into being fearful, resulting in curtailed buying. Pessimism is a quick and lusty breeder. Retailers are in business to sell the most they can. They should concentrate on doing just that as aggressively as their prudence permits.
Way to go, Bob! I think you’ve nailed the media correctly, and shone the light on their constant, often inaccurate doom and gloom reporting.
We’ve been surveying retailers continually and the vast majority are up over last year, and predicting a good holiday selling season. The damage done to the psyche of customers by this negative reporting is almost criminal.
Turn off the radio, cancel your newspapers…and go shopping!
Good read.
The media is in a constant race to show their supreme thought, efficacy and wit, therefore the need that modern society should have for its services.
I seem to recall that when the economy started to turn south there were a number of observers (some on RetailWire) who felt that the economy would be fine, if it weren’t for all the negativity of the media. It turned out the economy was on a downward slide more because these things run in cycles and because of some bad policies and decisions by some big players.
Point being, I think it’s too easy to blame the media and/or the government for everything that goes wrong with the economy and while it’s great for retailers to be as positive as possible about the holiday season, there is little value in bemoaning the press coverage. Credible media outlets do not base their reporting on what will “sell papers.”
A more rational approach to the current economic conditions has been that of some of the luxury marketers who have cut inventory and reduced the number of big sales they run. Sure, they sell less, but at a much better margin.
Oh, and a sales increase vs. 2008 should not be too hard to accomplish considering the conditions a year ago.
Bob Phibbs is clearly a member of the shoot the messenger club.
I have to agree with The Doc on this one. The news is really bad coming out and I’m not sure it has any merit. I just commented on an article today that said small business retail was doomed. Media is just a business and they are going to create a product that sells. People love bad news so that’s what sells. Is it overblown or spun? I’m pretty sure that it is.
I think there has been an agenda-driven tone to the media coverage this year. I commented at length about it in my blog posting in September. This dialogue has served to confuse and frighten the consumer and supported their aversion to spending. Retailers’ reactions, for the most part, have been to cut product, cut payroll, and cut selection which will have the guaranteed effect of fulfilling the prophecy of a lousy Christmas; Blah Humbug! Bob’s right; the retail winners will turn off the TV and turn on their customers with great product, service, and selection.
We lost real news 10+ years ago. Today, news stations are competing with over 200 channels of entertainment, reality and talk shows. Unfortunately, CNN, FOX News and others have moved to sensationalism to compensate for the lack of actual news and research.
No question the tough economy will have an impact on the holiday season and how people shop. The good news is all signs do point to a better year than last year. One reason is retailers have been very conservative on inventory. That will help keep demand and margins higher. The second reason is consumers have a pent-up demand that needs to be released. Although I don’t see consumers buying everything in sight, they will focus in on quality items that they need and/or enjoy.
Advice to retailers: This Black Friday and during the entire holiday season, focus on the overall shopping experience and selection of quality items and less on $3 appliances (Wal-Mart). That approach is not sustainable and there is nowhere to go ($2 appliances?). Smaller retailers that carry unique quality items will do well this year. I already checked with a few small specialty shops and sales have climbed in October from a year ago and they expect a strong holiday season (relative to last year).
PS – Make this year’s New Year’s resolution to turn off the news until they get their act together. It’s the only way to motivate them to change.
Sure, some of the blame should be placed on the media. They love to report bad news, and what kind of news story would it be to say that everything is fine? That story only works after they have reported the negative, and then can come back with a surprise positive.
However, that being said, the retailers cause their own problems as well. They tend to want to reduce Wall Street expectations, and therefore let everyone, including the media, think that things are worse then they are. They love to promote the negative, and then surprise the analysts.
I don’t think we can only blame the media; the retailers need to share the responsibility.
The media in today’s information world is fighting for their lives and for every eyeball they can get. Simple thing is, good news does not sell well, so let’s spin it so we can gain the most eyeballs. Is it possible that sales will be down? Yes. Is it possible sales will be up? Yes. Let the numbers do the talking and report the facts. Let the media stop trying to make the news and start reporting the news.
Has the media ever been right in predicting holiday retail sales? What about us on RetailWire? Have we measured our predictions? What would we measure them against? Expectations? Or, true year over year results?
While I certainly don’t blame the media entirely, they certainly are rarely called out–at least in the mainstream–on perpetuating falsehoods. This piece is the first in a long while calling them out a bit on their previous predictions. It’s a good piece.
The misreporting and characterization of the economic position has been incredible. (I’m not sure if that’s even the right word–it seems weak.) This is not the worst recession since the Great Depression. Unemployment is just now beginning to approach the levels of what may have been the worst since the last deeper recession in the early 80s. What it is, however, is likely the worst economic period that those reporting on it have lived through and can remember. But the worst since the Great Depression? Not even close. While the characteristics of this economic period are different than that of the early 80s, its depth into all areas is not present–not by a long shot.
The catch to most evaluations of holiday performance is and has been for some time to measure against ‘expectations’. I find that odd. Who’s expectations? And, why are ‘expectations’ more meaningful than true year over year performance? It’s easier to create doom and gloom by reporting that retail sales might have been up by 1% when expectations were to be up by 3%. Isn’t a 1% increase up?
The media isn’t the only one to blame but in the world of the lightening speed and vast sources of news, the media is tremendously more dominant and omnipresent. The impact is sometimes prolific and prophetic. The problem with that is, no matter how inaccurate, a certain percentage will always take it as truth or at least a fair representation. The old adage if you say it enough it becomes true. Just an example of that is the presidential campaign of 1992. Remember “It’s the economy, stupid.”? Remember “It’s the worst economy in 50 years.”? It was just as incorrect then as calling this the worst recession since the Great Depression is today.
Holiday sales will show an improvement this year over last. It will be measured on expectations so that results can be reported as a matter of perspective of those reporting and their audience. Some will cheer. Some will wane in disappointment. Which will we be?
Perhaps a self-fulfilling prophecy. I’ve been bemused recently to see daily headlines chock full of positive and negative forecasts. Does anyone really know anything or is it more the case, as mentioned in the article, that commentators and analysts simply want/need to get their thoughts into the public domain?
Of course there may be a bright side with headlines inspiring both retailers and shoppers to do whatever they can to buck the trend, doing their bit for themselves and business in general.
While the news media embellish and sensationalize, they are in the business of selling papers/magazines or getting viewers on their TV/cable channels or getting vistors to their blogs. “Blah” news provides little incentive for the consumers of news to take notice. That being said, the news media, in this case, are reporting what has been given to them. NRF forecasts a -1.0% loss on holiday season sales. ICSC first forecasts a loss for the holiday season and then reverses itself to predict a small gain. Other noted economists and pundits predict losses for the holiday season.
Even Wal-Mart, one of the chains that has benefited the most from the recession, said that comp store sales would be flat for their last quarter which includes the holiday season!
Since many retailers refuse to publish monthly sales data or comment on recent sales trends, what are the media to do? In creating an information vacuum, are retailers shooting themselves in foot and consequently doing a disservice to the industry and economy as a whole? The media have a responsibility to the public to report on a key industry, and financial analysts need to make recommendations on publicly-held retail companies.
I agree the media is probably being overly negative in their forecasts for this holiday season. However, you have to ask yourself “compared to what” when making forecasts for this year. Most of the data we have been collecting point towards consumers anticipating that their spending in 2009 will be similar to 2008. With anticipated spending a little higher in some categories and a little lower in others. I don’t think anyone wants to believe that the 2008 holiday shopping season is the new normal.
I also agree with the comments indicating that now is the time to shine a light on customer service. It does not take a great financial investment to create a positive and upbeat shopping environment.
It’s not that the media want to be negative, it is more a function of how they gather and report news. As someone already pointed out, most reporters doing the holiday shopping story are short-timers and don’t have memories of vapid and inaccurate or cautious forecasts from seasons past. Also, if some retailer or trade organization says “up” the reporter feels compelled to find someone who will say “down.” In my more than 45 years in and around journalism, I find that the naysayers (or at least counter-trend speakers) frequently make their cases in much more colorful terms. That pushes their views closer to the lead of the story and also enlarges their portion of the opinions expressed. I really don’t think political or editorial policies of the publication/broadcast outlet have very much to do with the news…other than the options exercised when the reporter was hired and trained.
Members of media often get it wrong. They also seem to have a political agenda in their reporting. These seem to be easy premises to get behind and not hard to illustrate. However, how much to spend and where to spend it is more a function of individual consumer situations and the general economic situation than holiday shopping predictions from the media (good, bad, or otherwise).
For retailers, most of their holiday bets have long since been made, most notably in product selection and inventory positions. How quickly they discount will be determined by the actual consumer response, not media reports.
While there may be little cause for optimism on the revenue line (with a few notable exceptions), there is reason for optimism on profitability based on the time retailers have had to react to the economic shocks, and changes in consumer preferences over the last year in preparing for this year.
I have taught retailing for over 30 years at the university level. Some of my research focused on shopping during the Christmas season. I too have noticed a lot of hype and doom and gloom. It starts out in October with great positive predictions, then as time goes on, every month, the reports get worse and worse. It is the same every year.
The holiday season never lives up to what the retailers want, or so it says in the media. Even though I’m not privy to their real-time data, I’m convinced that each season is a lot better than what is portrayed in the media.
I’d be concerned if any independent retailer paid all that much attention to broad macro reporting on retail spending forecasts. A far better source of information is their own sales trends. It’s the most relevant data they have to make well-informed decisions about whether to proceed more cautiously or more aggressively.
Similarly, I don’t think many consumers pay much attention to these forecasts either. If there is any macro reporting they are attuned to right now it would be the unemployment rate and forecasts for job growth. Still, like their retail counterparts, what’s most relevant to individual consumers is their own specific situation and expectations.
In the end, the biggest takeaway from Bob’s critique for me is that forecasts are just that and nothing more: forecasts. As every retailer knows, the value of the forecast is not in the final number (it will rarely be completely accurate), but in the process of preparing the forecast. The value is in the detailed and considered assessment of all the factors that are likely to impact the business.
If there is one thing that I find a bit troubling about Bob’s piece is the implication that retailers should generally be more aggressive than they are because the press tends to dwell on the negative. In any business, there’s a time to be more aggressive (when business is trending your way), and a time to be more cautious (when the tide is against you). I just put up a piece of my own on this topic, “The Retail Tug Of War”.
I think I’ve made this same general comment for at least the past three holiday shopping seasons, therefore, long time RetailWire readers feel free to skip by–you’ve heard it before. (And, I still think it’s true.)
Much anecdotal evidence has suggested–and some studies have shown–that large numbers of people no longer wait for the end of November to do the majority of their Christmas shopping obligations anymore. In fact, many find the commercialism, the over-cataloging, uncivil shoppers, and the scrapping for sales by retailers to be an appalling affront on the reason for the season. For all the conventional wisdom hype that Americans LOVE the holiday frenzy, and adore shopping in overly crowded stores amongst picked over merchandise and cold and flu germs, after having waded through sloppy ice and snow from the packed parking lot to get there–well, it just ain’t so any more.
OK, what about online shopping to get around all that, you ask? It’s true that avoiding crowds and germs is a benefit of online buying, but the “oopsie” out-of-stocks and delivery problems are greater there close to the holidays, and can pose problems for last minute shoppers as well.
The answer that many consumers have found is shopping for gifts all year round. Therefore, for many of us the money has already been spent and our shopping for Christmas 2009 is already done. When you see something perfect for Aunt Bertha in an antique shop in April, you buy it and put it away till December. Tickets for a Fall Out Boys concert in September that the kids want to see–voila! It’s their Christmas present (and everybody’s ecstatic). You’re in Nashville on business in July, so you pick up a couple CDs from an emerging new singer-songwriter for that certain somebody who is hard to buy for and who will be hosting a holiday party. See an ad for a remote romantic cabin in the Great Smokies for a fall weekend–hey, let’s make that (and a few bottles of wine) our Christmas gift to each other this year.
Retailers need to remind themselves that the calendar has 12 months. Until retailers get in sync with the public and understand the opportunities that exist for them prior to Black Friday, and until they actively seek to exploit these opportunities with good merchandise, advertising, and service all year round, (sans the desperate looking markdowns in December) they will continue to be disappointed in their “holiday” sales results.
All good retailers have an excellent holiday sales season. Only poorly-run and mismanaged companies have disappointing holiday sales. It’s very simple. So it depends on who the media talks to.
Does the media often sensationalize, (over)simplify, and sometimes just plain get it wrong? Of course; and they have their accomplices in forecasters, analysts and even (some) retailers who will say anything just to get their face/name before the public; so what else is news (no pun intended)?
But the real problem here is that BF just isn’t a very good predictor of the holiday season, let alone the coming year; I maintain there are just as many optimistic forecasts going bad…the correct predictions are the rarity.
And beyond that, there is the problem of giving meaning to the descriptions used: is a +2.2% good or bad? Is that before or after adjusting for inflation? How about population growth? All one can really say is that it is better than +2.1% and worse that +2.3%.
The media will report from a perspective that sells. This means that the doom and gloom reporting will continue, and the inaccuracies will also continue. However, I disagree with the author that the impact of discounting and cutting to the bone of prices is a bad thing. Discounting of prices does not necessarily mean not making any profits, only perhaps fewer profits on a particular item. Generally, it brings people into the store, where they shop to purchase other items and the total ring increases, along with the profits for each shopper’s visit.
This season will be a good holiday season, better than last year, and will start the upward trend that we will see going into 2010 as we recover from the recession.
Bob Phibbs is now one of my heroes. I don’t know the man and am unfamiliar with his company, but boy, did he nail this one. A major influence on our nation’s economic success is consumer confidence, and dire sales predictions–especially when they’re proven wrong year after year–work against consumer confidence. Phibbs’s counter-intuitive recipe for retailer success this season is perfect, and the positive buzz throughout the store is sure to be communicated to shoppers.
I believe that sales are what retailers make them. Certainly customers cannot be forced to buy, but get them into your store and apply all the influences we often list here, and the results will be positive. I trained briefly with Chuck Norris in the 70s, and the most helpful match technique he taught me was the attitude of my stance prior to and during matches. He encouraged an aggressive stance with the body leaning forward, eyes narrowly focused, and a sort of coiled-spring offensive attitude, looking for opportunities to strike. This communicates just one thing: attack. He discouraged a defensive attitude with the body tilted slightly back as if to escape, broadly focused eyes to spot incoming strikes, and the impression that the competitor is as ready to run as to fight. It’s a defensive, fearful stance. Chuck’s offensive stance was meant to communicate strength and a winner-take-all attitude, while the other communicates fear of failure. This applies to retail as well, regardless of what the media predicts.