It is a holiday tradition in American media to forecast poor Christmas sales. If it turns out sales aren't as slow as predicted, you can expect reports that shoppers are "only buying bargains" because "money is tight for shoppers this year." 2007 is no exception and is rather notable for the attempts of negative prognosticators to cling to their dire predictions even in the face of positive news.
Even before Thanksgiving, news media such as the Boston Herald reported that, "The list of reasons why this year’s holiday season stands to be a tough one for retailers could be lengthier than most people’s shopping lists." ABC Channel 7 let us know that, "Despite the hoopla of an early start to the season, the holiday cheer's missing at retail stores." UC Berkeley Professor Bob Edelstein informed reporters that a slow holiday shopping season could have far-reaching consequences.
Black Friday finally came and it was grudgingly reported the next day that shoppers had come out in droves. The Washington Post quoted John Ford of Sears Holdings as saying that,"It exceeded our expectations. We had more customers at opening yesterday than we had in prior years, ... it was 50 to 100 percent higher than it was in previous years." Did the increased traffic change the prognostications? "I don't think so," said Candace Corlett a principal with WSL Strategic Retail and apparently professional doom-sayer. According to Corlett, shoppers were out looking but probably not buying. "It's become more of a shopping sport," Corlett said.
Five days after Black Friday, when more data could be collected, ShopperTrak RCT Corp., estimated Black Friday sales this year rose 8.3% from 2006 to $10.3 billion, aka "strong sales." Still, the doom sayers did not give up. Dow Jones warned that, "last year, retailers had a good start during the Thanksgiving weekend, but many stores struggled in December, and a shopping surge just before and after Christmas wasn't enough to make up for lost sales." Before you wonder if the Dow Jones reporter has a good point, keep in mind that Christmas shopping in 2006 was a healthy 4.6% better than the prior year.
We are now officially one week into the Christmas shopping season. According to ShopperTrak, data for the Thanksgiving weekend, not just Black Friday, shows retail sales at a strong 6.5% over 2006. Have the doom sayers relented? Of course not. Instead they have resorted to the "shoppers are only buying bargains this year" argument. "The numbers don't tell the whole story," claims Peter Morici, an economics professor at the University of Maryland, "Retailers are trying to put a positive spin on things. People are very pessimistic about what things will be like this winter. ... they're buying less expensive items. So it all fits together. It indicates a slowing economy."
According to the Dow Jones newswire, the National Retail Federation forecasts a 4% rise in holiday sales from a year ago, the smallest gain in five years. In truth, despite being "the weakest in five years," 4% growth isn't bad. If holiday sales outpace economic growth it means that consumers are either going into debt or they are cannabalizing consumption from other parts of the year. Nobody should be disappointed in 4% annual growth. However, based on the data collected so far, I am going to "take the over" and forecast that holiday sales will exceed the forecast 4% increase over last year.