Holiday Retail Forecasts

The holidays are approaching and that means holiday traditions are approaching too.  We all have our favorites.  For some it’s spending time with family and friends, for others it’s parties and get-togethers.  Some people enjoy the cooking and baking, while others like to decorate while consuming large sums of liquor.

For myself, my favorite tradition this time of year is listening to holiday retail forecast.  I know it’s “beginning to look a lot like Christmas” when I hear the media report on what a “bleak shopping season” it will be.

“Current financial pressures and a lack of confidence in the economy will force shoppers to be very conservative with their holiday spending,” reported Rosalind Wells, Chief Economist for the National Retail Federation.

Sure it will.

Every year they say Christmas shopping will be bad and ever year it’s better than expected, usually better than the year before.

On September 23rd of this year, the NRF forecasted a 2.2 percent rise in retail sales for the 2008 holiday shopping season.  That’s well below the ten-year average of 4.4 percent but a rise nonetheless.  Retailers are still making money.

Of course that was in September.  A lot has changed with our economy since then.

“This year looks so bad, that even normally good signs for retail sales, such as more Americans staying home this Christmas, can’t save the season for retailers,” said Britt Beemer, chief executive officer of America’s Research Group.

His company forecasts a 1 percent drop in retail sales—their first negative prediction in 23 years of Christmas shopping surveys.

The difference in the two aforementioned forests is over three percent.  Can things change that much that fast?

“Since mid-September, rapid, seismic changes in consumer behavior have created the most difficult climate we’ve ever seen,” notes Brad Anderson chief executive of Best Buy.

Now, you should feel sorry for Best Buy.  This economy is really hurting them.  They now expect an annual revenue of somewhere between $43.7 billion to $45.5 billion, that’s down from a previous prediction of about $47 billion.

How will they cope?

I admit I’m not an economist.  I understand that the economy is complex and I could probably find numbers that would support any argument.  It just seems to me, that most of the time when we hear a retailer is doing poorly it’s not because they aren’t making money, it’s because they aren’t making enough money (at least according to them).

We hear despair and woe because none of the parties involved have anything to gain by announcing a robust holiday retail season.  Retailers want you to think business is bad so you’ll go shopping.  The media wants you to hear retail sales are down because they take pleasure in reporting bad economic news.  The media loves’ bad economy stories almost as much as they love missing white women and dog stories.

If there can actually be a bad holiday season for retailers, then this year’s yuletide shopping spree would definitely be it.  According to a poll done by America’s Research Group, 40 percent of consumers plan to spend less this Christmas while 35 percent plan to buy fewer gifts.

“Consumers are nervous about what they are going to spend. They may buy fewer toys,” explains Chris Byrne, a New York-based toy consultant.

So even if we take the lowest estimate mentioned in this article—a one-percent loss— that’s still not bad.  In all honesty, for as much as the media has drilled into our heads what a horrible economy we are currently suffering though, the retail season should be non-existence.  The fact that we are even talking about holiday shopping is a sign things aren’t as bad as they seem.

I may be cynical of retailers and the news media when it comes to economic forecasts, but I’m not cynical of the American consumers when it comes to Christmas shopping.  I doubt the retail shopping season will be lower at all.  Americans love their Christmas and they love to buy presents

The American holiday shopper will find the money to buy gifts their love ones don’t need.  The credit crunch may have caused this year’s bad holiday shopping forecast but credit will probably be crunched again.  This time used to pay for all the presents under the tree.  Just remember, I’m a size large and a 36 regular.