Sales on the day after Thanksgiving rose just 0.5% to $10.66 billion, according to ShopperTrak RCT Corp., a research firm that monitors sales at more than 50,000 stores. That compared with a 3% year-over-year Black Friday increase in 2008 and an 8.3% surge in 2007.
"It's a positive sign that we had an increase in sales, but the numbers certainly don't indicate that those will be sustained," said Britt Beemer, chairman of consumer behavior firm America's Research Group.
Nationwide, 195 million shoppers visited stores and websites over the four-day weekend, up from 172 million last year, the National Retail Federation said Sunday.
It's too early to be certain, of course, but to me this points to a brutal trend: everyone is looking for bargains, and refusing to buy anything else. That means that profit margins are likely to be thin, and even with aggressive discounting, retailers may not be able to drive much volume.
What's bad for retailers may be good for us, of course. The amount of consumer credit outstanding has fallen pretty dramatically, but because of the buying binge we were on, it's still kinda high, as is the ratio of debt service payments to income. On the other hand, many of us are retailers, or work for them, or for companies that sell all the things that Americans aren't buying. The contraction is probably necessary. But it is not going to be pleasant.
With unemployment above 10%, I'm surprised that it is this good.
No, No, No. Don't any of you watch ABC, CBS, NBC, MSNBC, CNBC, or read the NY Times? The recession is OVER. NBER says so, so it must be true.
Now, please, return to your shelter-digging...
You must live a very sheltered life.
Don't you know that all indicators are lagging indicators, so the recession is over before any of them improve?
It ain't over till it's over.
The end is near.
I bought a Dremel tool for $20 off. Other than that, everyone's just selling crap I don't want anyway, so I don't much care how discounted it is.
In times of doubt, where do company's cut first?
Innovation is at or near the top of that list.
Small businesses will still innovate, particularly when the founder of the business is basing his commercial success on the fact that he has invented a better mouse trap, and he is now going to sell it.
This is why Obama's war on small businesses is so devastating.
Large companies cut their innovations funds drastically at times like this. They fall back to tried and true, and pitch slight modifications as huge innovations (note the Samsung TV's - they're thinner, but are being sold as revolutionary...). You're also seeing very few new holiday ads this year. Note how many ads are repeats from last year - it's amazing.
This logic applies to healthcare, too, of course. It's precisely why Megan and many others are saying "you will crush innovation if you continue these healthcare policies."
It's a certainty. Unlike the clapper, magic jack, and all of those other Ronco-type things, not a lot of people develop legal drugs in their basements. Private investment in pharma-research will plummet.
Were all doomed.
You are doomed. I am using my new Dremel for custom enhancements to a .45.
Mr. Lyman wins the thread.
Don't shoot your eye out.
Note how many ads are repeats from last year
You watch ads?
Only when I'm not modifying a 1911...
;)
Last year's innovations in video recording and ad skipping mean that innovating in ads is like innovating in buggywhips.
Even in the best of times, it's probably a waste of time these days. I don't think I've seen a TV ad in months.
Certainly there are many people who participate in the contact sport of Black Friday. However, the vast majority of people I know avoid it like the plague. We would far rather pay full price and not be trampled, crowded, or herded.
Jane,
Are you channeling Yogi Berra - "No one goes there anymore - it's too crowded."
Was my thought, too. I drove by the Mall Friday- the parking lot was packed, as were the parking lots in front of Best Buy, Lowes, and Walmart. I don't know who else stayed away Friday, but I feel sure I was in a minority.
Question about consumer debt - Wouldn't lower levels of consumer debt translate into higher levels of consumer spending in the future.
For example take two 35 year olds both make 70k a year:
Example A: Left college with $5k in CC debt and was up to 30k by the time they were 27 and while they might pay it down to 25k now and then it quickly bounces back up to $30k.
Example B: Left colleg with zero CC debt and has managed to pay off the balance every month since.
30k @ 15% is $5k a year in interest - all things being equal person "B" is able to spend 5k more a year on goods and services than person "A".
Wouldn't lower levels of consumer debt translate into higher levels of consumer spending in the future.
No. Because Example B is causing the CC company to lay people off, meaning lower consumer spending.
Debt time shifts your consumption, but it reverse-time-shifts somebody else's consumption. The effects balance. The world cannot consume, in aggregate, either more or less than it produces (with some room at the margins for pulling stuff out of inventory or dropping things at the dump).
It's interesting to watch the media spin. They seem to be latching on to the 0.5% increase as their main narrative.
As Megan says, it's more important to look at profit margin. If people are bargain-hunting, it's not going to do much for the bottom-line of retailers, even if they do get decent volume. We won't know for awhile, and retailers sure-as-hell aren't going to release their Q4 financials until they must.
I expect a cash-for-clunkers-esqe spike that will depress future sales.
I don't disagree, but if the gross were flat you could at least make the claim that people are spending. Yes, the profits were lower, so it's much more of a bargain-hunting situation, but at least people are opening their wallets.
That didn't happen. As was stated here, people were out in force on Friday - they just weren't spending as much.
I'm curious to know the breakdowns showing what people are buying. I have a strong feeling - and it's just a feeling - that we are going back to the days of my youth, when a nice shirt was a welcome gift for an adult. Hated by kids, of course, but for an adult who is really struggling to make ends meet?
Shoes trump an iPod Touch, if you don't have shoes...
It will be a while before people run out of shoes. Well men at least. Women's shoes seem to be made of cardboard and plastic and so probably do need replacing every 6 months. But guy's shoes from 2008 will last until 2012 or so.
There may be increased demand for shoe polish.
Not to digress too badly, but you are SO right. Much like haircuts (aka "styling") and dungarees ("fashion jeans"), women gladly pay a fortune for a product that is drastically inferior to what men purchase.
Even my dressiest shoes, with 100% leather soles and ultra-soft leather, are sturdier than anything the women in my house wear with a dress.
To bring it back on subject: 20 years ago I knew a very old man who was a cobbler in the 1930's. He would routinely refer to women's dress shoes as "junk," and wonder why women weren't wearing fashionable boots, like they did "in his day."
This weekend I noticed a LOT of dressy boots on women wearing skirts. These boots were (a) uber-sexy, and (b) about 50 times more durable than the spaghetti-contraptions they were wearing last year.
So, who knows... maybe there is something to be said for recessions driving up the demand for more practical fashion footwear?
Second on the boots. Maybe because of climate, women have always worn boots around Boston. Like the first warm spring-dress day, it's always a pleasure to see the coats and boots come out.
My lady just bought a pair of knee-high black ones. That's money well-spent.
Rob,
The world cannot consume, in aggregate, either more or less than it produces
Yes, but unless everything is running at 100% capacity we can always produce more. Money that would have gone into bonds backed by credit card receivables will either go into other bonds (reducing interest rates) or equities, or other spending including (but not limited to) consumer spending.
Yes, good point.
I think people forget sometimes that producers exist to serve consumers, not the other way around.
I read the WSJ, and they're sure the whole bad part is over. Everything's coming up roses because some addled souls are bidding up equities on the market. On its way to the next crash, is my guess.
With unemployment as high as it is and credit tight, I wonder who they think is going to buy all their junk. (Not to mention the ever-present question of why anyone would want to.)
Money that would have gone into bonds backed by credit card receivables will either go into other bonds (reducing interest rates) or equities, or other spending including (but not limited to) consumer spending.
Money that goes into credit card receivables is consumer spending, since those receivables are created by consumer spending. If there are fewer receivables for investors to put money into, that means there is less consumer spending by CC users.
The news stories that I saw on TV all cited retailers as saying that people were using a lot more cash and debit cards, rather than credit cards, than in past years.
That also does not bode well for retailers.
You don't much about retailing. Cash means you don't take the 2-3% hit from a credit card. Retailers (outside of house charge cards) prefer cash.
Yeah, but if people are spending cash, it means they are only spending money they have rather than money they hope to have. That's not good for retailers.
Jmo: I suppose you could argue that the people who work at CC companies could be productively employed in widget factories, and thus lower debt levels would mean an economy with a greater widget capacity. But on the other hand the consumption-smoothing effect may help to maintain spending as people acclimate themselves to relatively expensive lifestyles and then eventually attain the income necessary to support it (rather than becoming acclimated to austerity and maintaining it when income rises).
But generally speaking, a dollar of spending on interest payments is a dollar of salary for some paper shuffler at MBNA, which he can then spend on lunch or in getting some from his wife, who if the Kay Jewelers ads are to be believed is basically a hooker with nagging rights.
Jewelry ads are the nastiest, most amoral ads out there.
"Love is available at discount at goldmark" Yuk.
(OK. There are worse ads. Brothels for one.)
I agree. Plus, by any rational measure diamonds should be cheap now, but they've created an entirely artificial distinction between manmade and natural diamonds, and at least to this point the public is playing along.
One sparkly rock ought to be as good as another, regardless of provenance.
You're not buying a rock, you're buying a symbol of your ability to waste money on something fundamentally useless. It's the human equivalent of dragging around a bird-of-paradise tail. To put it another way, it's valuable because it's expensive, not the other way around.
Heh. I guess it does make more sense in that context for two identical rocks to be priced differently, since you're basically paying for status anyway.
We looked into manmade diamonds for my engagement ring, and the actual lab made diamonds--rather than high-end simulants--were not cheap. Maybe they will be, someday, but right now they're at the very high end of the market.
Money that goes into credit card receivables is consumer spending, since those receivables are created by consumer spending.
Minor point but someone who has carried a 30k CC balance for 6.6 years at 15% has paid 30k in interest. Paying the 2% min. 100% of the "consumer spending" is repaid in 4 years. That 30k balance is just accumulated interest.
Black despair among Grim Retailers
...servicing the consumer economy
Paraphrase from "Disclosure" the movie:
"I thought we bought this company because
they make things."
Innovators need to start making things
that people with money want to buy.
I am _not_ referring to a $50K bottle
of Single Malt; that is an investment. :)
Not surprising. As best I can tell, even the employed are cutting back because who the hell knows what's going to happen over the next few years.
OTOH, while my wife and I both got through Thanksgiving with flat stomachs, our holiday budget is already looking portly. I just cannot resist giving people Roombas. Definitely going to miss our $12K monthly savings target now.
You're forgiven. Every once in awhile, you're allowed to brag about goals you won't accomplish.
Heh. OTOH, if I didn't have the goals I know I'll miss, I'm sure I would do considerably worse. At least we're forced to feel guilty now.
Are we going to see any retailers go bankrupt before Christmas?
Derek
Nah. They'll sell a bunch of gift cards before Christmas, and then declare bankruptcy right afterwords so nobody can redeem them.