2006 Revisited?

  • Record Black Friday sales.
  • Consumer spending- the bright spot among mixed economic indicators.
  • Shoppers “self-buying” for the holidays.
  • Significantly increased mall traffic.
  • A 6% composite same store sales increase.
Quick- what year are these headlines from?  2006?  2005?  1989?

No, November 2010.

This week retailers reported November 2010 same store sales results, and the year-to-year results were the strongest since 2006.  The November sales increases were broad based, with discounters, department stores, specialty apparel and luxury chains all showing strong positive results.

More than Black Friday

Certainly retailers are increasingly promoting Black Friday deals – the NRF reported increased Thanksgiving day traffic of 8.7% for 2010.   However, the November results displayed more than just a strong Thanksgiving weekend.  With momentum from October, most chains reported robust sales increases throughout November.  This could mean one of two things, either:

1) With the introduction of Black Friday deals earlier in the season, holiday shopping was pushed forward throughout November, or

2) We are seeing an acceleration of the gradual improvement in consumer spending.

There is support for both arguments.  Discounters reported strong results, and many full-price retailers attributed their sales figures to aggressive promotions and discounts.  However, the breadth of positive indicators (geography, product categories and retail concept) hint towards more than just discounting.

Online

Most retailers now include online sales in their same store figures.  As a result, when you combine double-digit online increases, with an uptick in November store traffic, impressive numbers will result.  With the advent of mobile devices and m-Commerce, experts, most of who were predicting 10 to 12% online sales increases, may have been too conservative.  Case in point – Macy’s reported a 32% online sales increase in November.

The Price is Right

Remember the old TV show, The Price is Right?  It probably predates most of you, unfortunately I’m old enough to remember it clearly.  The goal of the game was to guess the price of an item and the contestant whose guess was closest to the real price, without going over, won. Often the earlier bidders would be conservatively low, in order to not lose by bidding too high.  Often later contestants would place guesses just slightly higher than the other competitors to have an advantage.

Where am I going with this?  Well, most of the holiday shopping surveys released earlier in the year projected 2010 holiday sales increases in the low 2% range.  BDO’s survey results, released closer to the shopping season resulted in an estimated 2.8%.  Given the continuing positive momentum from October and November, only time will tell who will get a chance to spin “The Big Wheel”.

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