Sunday, November 30, 2008

Black Friday Sales Up 3% In Nominal Terms from Last Year, That is Negative in Real Terms

Black Friday sales were up 3% over last year. But, let's not get excited about this. This is a nominal growth rate. If you subtract the inflation rate to get a real growth rate it is probably closer to -2.5%. Text in bold is my emphasis. From Market Watch:

Strong discounts brought U.S. consumers to the stores on "Black Friday" -- the traditional first day of the holiday shopping season -- with estimated sales rising 3% from last year, according to industry analyst ShopperTrak RCT Corp.

ShopperTrak said in a report Saturday that preliminary sales for Black Friday totaled $10.6 billion. This year's rise in sales, while lower than the 8% increase seen for the day last year, comes despite plummeting consumer sentiment data and other economic turmoil.

"Retailers should be cautiously optimistic as deep discounts drove consumers en masse to various retail locations to spend, despite myriad economic pressures seen over the last two months," ShopperTrak said.

Black Friday refers to the day after Thanksgiving, so called because many retailers begin to turn a profit on that day, moving from "red ink" to "black ink." Sales for the day are seen as a key harbinger for the overall holiday season.

Regionally, the South led the gains with a 3.4% rise over 2007, closely followed by the Midwest, up 3.0%; the West, up 2.7%; and the Northeast, gaining 2.6%.

ShopperTrak cited retailers' early openings and "numerous door buster specials" and other promotions.

"While this is an encouraging start for retailers, there's no guarantee these deep discounts will continue after Black Friday weekend, which could slow spending," said Bill Martin, co-founder of privately-held ShopperTrak.

"Additionally, consumers have just 27 days to shop this year as opposed to 32 in 2007, which may catch some procrastinating consumers off guard, leading to lower sales levels," he said.

The ShopperTrak National Retail Sales Estimate covers retailers of general merchandise, apparel, furniture, sporting goods, electronics, hobby, books and other related store sales.

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