Consumer spending is 70 percent of American economic activity, and the holiday shopping season always offers crucial information about the national mood. If we won't spend to buy plastic junk made in China this month, will we muster the courage to buy the stuff that matters in the coming months, such as cars, houses, and stocks?
So far, the data on the 2009 Christmas shopping season is coming as fast and furious as information about Tiger Woods' mistresses. But the data are equally unsatisfying: instantaneous and relentless, but not comprehensive or insightful.
On the one hand, the International Council of Shopping Centers projected holiday sales would rise 1 percent to 2percent, and its survey suggested consumers will boost spending on gifts this year but will cut down on gift cards. On the other hand, early data is gloomy. ShopperTrak reported that Black Friday sales rose just 0.5 percent from last year. According to the National Retail Federation, more people are shopping—195 million shoppers hit stores or Web sites over the weekend, way up from 172 million last year. But they spent less. Average spending fell 7.9 percent, from $372.57 per household last year to $343.31 this year. For some sectors, the weekend was great. MasterCard SpendingPulse said that in November, which included Black Friday and the crucial Thanksgiving weekend, spending on consumer electronics rose 6.6 percent.
Confused yet? You will be. You can't throw a rock without hitting an online retailer prognosticating about Internet holiday shopping trends. HauteLook, an online retailer that does limited-time sale events, said that between Nov. 26 and Nov. 30, sales were up 500 percent from last year. According to a Shop.org survey, 96.5 million Americans said they'd shop on Cyber Monday this year, up from 85 million in 2008. But according to Comscore, those estimates are wildly high. It says that there were only 8.7 million online buyers on Cyber Monday, and retail e-commerce spending that day rose just 5 percent to $887 million. Coremetrics painted a rosier picture of Cyber Monday: Compared with 2008, sales were up 13.7 percent and the average amount spent by consumers was up 38.2 percent!
Aside from being contradictory, these data are incomplete. As Barry Ritholtz noted, many of the data are based on surveys rather than full measurement. And it's hard to make conclusions about a marathon based on how runners ran the first two miles. As the Wall Street Journal noted, Black Friday weekend sales in 2008 fell 1 percent as tracked by MasterCard's SpendingPulse. But sales for the whole season fell 6.3 percent.
If people are front-loading their shopping, then a rise in Black Friday spending wouldn't necessarily indicate a healthier retail environment. (Indeed, ICSC's survey said that 16 percent of consumers would start shopping on Black Friday, compared with 10 percent last year.) And growth in e-commerce sales is almost certainly misleading. A mid-single-digit increse in e-commerce sales would sound impressive, especially at a time of slack economic growth. But one would expect sales to be up impressively because of the overall long-term growth of online retailing. Regardless of what's going on in the economy, each Cyber Monday should be stronger than the last simply because a larger chunk of retail sales are conducted online with each passing year. Or maybe not. Analysts believe that Cyber Monday activity is fueled by people shopping at work. Most offices have faster connections than home PCs, and it's more fun to shop on your company's time than on your own time. But there are far fewer people with jobs this year than last.
Finally, what ultimately matters to retailers and investors are the profit margins companies are able to maintain during the Christmas season. If sales and traffic are being driven largely by giveaways, door-busters, and low-margin sales, what would seem to be a healthy rise in total sales might still indicate underlying weakness.
We won't know if holiday shoppers were naughty or nice until well after the Christmas trees have been mulched. For true insight, we'll have to wait for the quarterly earnings results of major retailers, when we will see how much stuff they sold and how much green stuff they got to keep. But in this age of ceaseless aggregation and dissemination of information, it's likely the updates will continue unabated. My survey predicts the volume of online holiday retail-sales discussions was up 6.2 percent on Black Friday, 17.4 percent on Cyber Monday. and will finish up 4.9 percent for the whole season.