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Will Retail Sales Be a Lump of Coal?   (December 18, 2006)


I can already foresee the excuses which will pour forth after "disappointing" retail holiday sales numbers are finally released: gift certificates are only counted when used in January, Internet sales weren't counted, etc. Fine; then lump January and December sales together to catch the gift certificate receipts, and include the web orders placed in December, too. Then you'd have a "no excuses" number.

While the financial press is serving up heaping after heaping of cheery news, here's what readers are seeing in the real world:
Harun I.'s note in your December 13 posting on holiday shopping (or the lack thereof) prompts me to offer another bit of anecdotal information. Except for groceries, I do most of my shopping on-line -- books, music, movies, clothes, contact lenses, medicine, computers, wine, even big-ticket items like living room furniture -- so I get a ton of e-mail offers from the sites that I've done business with. What has really struck me over the past few weeks is not only the sheer quantity of the "special offer" e-mails coming in, but the increasingly generous concessions that on-line retailers seem willing to make, especially in the area of shipping ("free shipping for the next five days!" "free FedEx second-day through the 17th!" "free shipping on all orders over $50!"). Even L.L. Bean, which years ago disappointed me when they started charging for regular shipping, has had to make concessions for the holidays. The overall tone strikes me as almost desperate -- you don't carpet-bomb the ether with discounts if business is booming. Perhaps this is another little indicator that the canary down in the coalmine has been feeling some shortness of breath lately?

I forget how exactly I happened upon your blog, but it's been required reading now for at least half a year -- thanks so much for your excellent work.

J.M.
Next up is correspondent Aaron K.:

I went out mid last week, early in the mid evening (after rush hour) to do some shopping. Hit Best Buy and Target. I was shocked: it was dead.

It was not Black Friday, but we're talking mid December here.

I've seen nothing like this in my life.

The official reports stink to high heaven, which I had already gathered when noting that no one could decide whether Black Friday sales were up 22%, or 12%, or maybe just 6%. No one could get the story straight. Yet at the same time Wal-Mart revenues were down; Best Buy, down; Home Depot, down, etc. Wal-Mart alone is $330bln of the economy per year... it overshadows everything else. That should be the only bellwether needed.

Aaron K.
How do we reconcile the giddiness reflected in the stock market and media with reports like these? Are people truly embracing the Web for much of their shopping, and retail sales will surge as predicted, despite the empty stores and malls? Perhaps, but perhaps not.

Note: In the spirit of disclosure, some weeks ago I noted that I had bought puts on the DJIA and calls on gold. Both speculations have lost money, going in the opposite direction. Moral of the story: I'm a idiot, a moron, a fool, etc. Do not touch anything I own with a ten-foot pole.


For more on this subject and a wide array of other topics, please visit my weblog.

                                                           


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