Bleak Black Friday
Reports on Black Friday sales have largely agreed on some basics. But the more you dig into the numbers, the more obvious it is that we're seeing some particularly ugly business conditions, because one figure out of context doesn't tell you everything you need to know.
Start with the raw numbers. According to AP, store sales on the day after Thanksgiving were up three percent over the same day last year. That's already being seen as low at best on retailers' expectations. But consider that number in the context of inflation, which has run about 4.3 percent in the last 12 months. Even with the mix of products and margins being equal to last year, real year-to-year sales are actually down 1.3 percent.
But wait, it gets uglier. Retail consultant Walter Loeb expected the results of the entire weekend to be below last year, based on conversations he had with department store and discount executives. Furthermore, according to reports, people bought smaller items even as retailers cut margins in an attempt to stimulate shopping. In short, sales are definitely down in real terms and everyone is making less money.
In high tech retail, more specifically, consumers at Best Buy and Circuit City "cherry picked the big discounts and then left the store," according to JPMorgan analyst Christopher Horvers. Marshal Cohen, chief retail analyst at NPD Group, said that "traffic is up compared to last year, but the bag count is down." If he is correct, then low-priced items intended to act loss leaders didn't get the add-on sales they would have needed to be a profitable tactic, and early hours to help generate excitement likely just added costs.
One bit of good news for the high tech industry is that, according to at least one analyst firm, consumer electronics and casual apparel seem to be the big winners in terms of what people actually bought.
NearbyNow is currently monitoring what items are in the highest demand across hundreds of cities in the US, based on the use of its popular local shopping service where consumers can search for items at stores near them and put them on hold for pick up. The Wii Fit(TM) Bundle, and all Wii(TM) Accessories, including the Wii Super Smash Brothers Bundle, are all in very high demand. These items continue to be particularly popular in the Midwest and Northwest while the Southwest favors Killzone for PlayStation 2 and Nike's Shox running shoes for both men and women.The biggest electronics category gain was Blu-ray players, which were up 147 percent. Given that prices were as low as $130, that could mean an even higher unit gain, as prices are less than a third than what they were a year ago.
Shopping man image via Flickr user pimpexposure, CC 2.0.