A few things you can count on every year around this time:

  1. Sales data for Black Friday will be touted by biased interest groups. They are invariably have an upside bias;
  2. Headline writers will get it wrong
  3. Survey data will be taken as the equivalent of actual sales;
  4. Strong forecasts will be subsequently proven wrong;

Such is the current situation with the Black Friday sales data, with reports still trickling in from around the country.

The WSJ goes for a hat trick of errors, starting with this article’s headline:

Holiday Shopping Off to Strong Start

What’s wrong with this? First, as opposed to actual sales data, they rely on a “survey of 3,370 shoppers, the National Retail Federation estimated shoppers spent an average of $372.57 over the weekend, up 7.2% over last year’s $347.55.” The National Retail Federation is hardly the objective group you want crafting (or hiring 3rd parties to create)  survey questions; 2nd, we know that humans are terrible at forecasting their own behaviors. Historically, their projections have had little correlation with their actual spending patterns. And third, the headline is belied by the details contained in the article. (MarketWatch was no better)

The NYT did no better. They wrote (Deep Discounts Draw Shoppers, but Not Profits):

“The National Retail Federation, adding up sales Thursday through Saturday and projected sales for Sunday, said that each shopper spent about 7 percent more this year than last year. Shoppers spent an average of $372.57 Friday though Sunday, according to the federation, a trade group”

No, the NRF did not “add up sales.” They added up self-reported answers to survey questions. As we have seen over the past few years, there is a world of difference between the two.

One of the better data sources of what the retail season might look like comes from Comscore, which tracks actual online retail sales.

“ComScore on Sunday reported that online, nontravel retail sales on the Friday after Thanksgiving, traditionally a big day for consumer spending, reached $534 million. That’s up from the same day a year ago, but just barely–online retail sales rose just 1 percent, from $531 million…

But for the four weeks of November through Friday the 28th, retail e-commerce dropped to $10.4 billion, down 4 percent from $10.8 billion for the same period in 2007, according to ComScore. For the full holiday season, even Friday’s slight gain may look good. ComScore predicted that for November and December, online sales will be flat compared with 2007, coming in again at $29.2 billion.”

Bloomberg also got it wrong, but at least provided some context:

“U.S. shoppers, lured by discounts of as much as 70 percent, came out in greater numbers than expected and spent more this holiday weekend than last year, though those figures may not foreshadow a stronger holiday season.

The National Retail Federation, AN INTEREST GROUP FOR RETAILERS AND SHOPPING MALLS,  said 172 million shoppers went to stores and Web sites, a 17 percent increase from a year ago and more than a forecast of 128 million.  SHOPPERS SAID THAT they spent an average of $372.57, up 7.2 percent from last year, according to an e-mailed survey conducted for the NRF by BIGresearch, a Worthington, Ohio-based polling firm. SHOPPER SURVEYS HAVE A TRACK RECORD OF BEING UNRELIABLE FORECASTORS OF BEHAVIOR.

The early turnout may not be enough to overcome consumers’ reluctance to spend as they cope with climbing unemployment and housing costs and shrinking values in their stock holdings. The NRF said its forecast remains that holiday sales will rise 2.2 percent to $470.4 billion, the slowest growth in six years.” (My edits are ALL CAPS)

In an ideal media world, Bloomberg would strike nearly all of the middle paragraph. Alternatively, they could add information explaining that the NRF is a PR group for retailers, and that their surveys have not been historically accurate forecasts of actual spending.

Later this week, we should get Master Card’s SpendingPulse data. It is the actual measurement of what people spent (via their MC Credit Card) plus checks and cash. It has proven to be more reliable than either foot traffic, surveys and other biased sources.

To get a better view of this year’s holiday spending, back out the fuel purchases (whivhmay appear depressed due to less usage and lower prices). You also need to adjust for some of the gains in online sales, which are likely to be up 20% as part of a secular trend towards online shopping, not increased retail sales.


How Good Were Holiday Sales Really? (January 2008)


More Bad Data from the NRF? (November 2006)


Repeat After Me: Spending Surveys Are Meaningless (October 2007)


Holiday Shopping Off to Strong Start
Unprecedented ‘Door-Buster’ Deals Send Sales Up Significantly Over Last Year, but Crowds Thin on Saturday


Deep Discounts Draw Shoppers, but Not Profits
NYT,  November 30, 2008


ComScore: Black Friday e-commerce hits $534 million
Jonathan Skillings
CNET, November 30, 2008


U.S. Holiday Sales Rise in First Weekend, Group Says
Lauren Coleman-Lochner
Bloomberg November 30, 2008


Category: Consumer Spending, Credit, Economy, Retail

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

20 Responses to “Spinning Black Friday Retail Sales”

  1. John Borchers says:

    Even Mastercards #’s can not be used. There is no acceptable substitute for profit numbers because that’s what equities are priced off of.

  2. Bruce in Tn says:

    Exactly Right, Ritholtz! As someone once told Tom C. “Show me the Money!”

    These guys may have a bad influence on the NAR, however….the next thing you know the NAR will be reporting in “foot traffic”….

    Snowed here overnight…gorgeous day to get back to the salt mine…

  3. Bruce in Tn says:

    By the way the Baltic Dry Index now threatens to break 700 and the supply of houses is above 11 months once again…


  4. John Borchers says:

    Anyone else think we break new lows before Xmas? I’m glad I got short Friday. Contemplating how much, if any, to add at this point.

  5. AndrewHorowitz says:


    That was a great breakdown of a topic that needed some clearing of fog…. It is too bad that between the media and special interest groups, consumers and investors are simply looked at as sheep…

    Already taken to slaughter, it appears that a final shearing is wanted by the those that think we can be lead around with faulty numbers embedded in failed practices. It is really a wonder how anyone plays the game with rules slanted and bent in one direction. Itn’t it obvious why this market is failing….?

    The Disciplined Investor (http://www.thedisciplinedinvestor.com)

  6. Archiphage says:

    I don’t think we’ll hit new lows before Xmas… but that doesn’t mean I won’t already be short USD/JPY or EUR/JPY if it does happen!

  7. John Borchers says:

    Adding ERTS as a short today. $22.50 dec put @ 3.70 limit. Can’t make $ during the good yrs = probably never going to make money.

  8. good going BR, another example of you, at your best.

  9. dave says:

    Based on the NRF press release, today’s front page story in the San Jose MN is “Robust Start To Shopping Season”. The NRF and the NAR should do their Xmas party together.

  10. Bruce N Tennessee says:

    I am still trying to be a realist, not a bull, not a bear….but I do think that our problems to date come from the loss of the ATM of increasing housing values…now we strongly need to consider what happens over the next few months with credit cards…there has already been much speculation on our blog sites, but now even pretty well respected analysts are getting religion….


    Trillions in Credit Line Cuts Ahead: Whitney

  11. advsys says:

    I bet we get spin even around the Master card numbers. Something like there was a shift to cash this year so you should ignore these terrible numbers etc.

  12. leftback says:

    Right on, Barry.

    The RTH and the URE seem to be telling the REAL story of retail prospects today… today’s pullback was fairly well telegraphed. I got some SRS on Friday and will sit in it until we have a solid reversal.

    This is not going to be a good week for stocks but I may do some bargain hunting in energy/precious metals.
    The action in the long bonds is amazing. It sure looks like a bubble but I am not fighting this battle today.

  13. D.H. says:

    Even IF numbers looked a tad better on DAY ONE, it makes perfect sense that this year people must capture the best possible sales because they have less money to spend. Thus, the Black Friday activity is skewed. Once we have the full season’s data, we will clearly be disappointed since the House ATM doesn’t exist this year.

  14. mw says:

    Many investors think these huge daily rallies are a pretext to a bigger rally .. they don’t understand that a really huge bear market will have huge (sucker) rallies.

  15. jason says:

    I share the opinion that more people than usual will be out on Black Friday trying to find bargains. I know my family was and they are now effectively done for the season. They had a smaller budget and were trying to stretch it for all it was worth. My wife and I are forgoing gifts for each other. We still have our jobs and are not underwater on our home.

  16. Winston Munn says:

    @Bruce N Tennessee

    PBS interview of Robert Kuttner – to me, it seemed every other sentence started, if we are to avoid depression….

    “We need the government big time to prevent this from becoming the Great Depression II,” Robert Kuttner tells NOW’s David Brancaccio.

    Kuttner has also testified to Congress about failure of deregulation.

  17. Bruce N Tennessee says:


    Since I can’t change what is going to happen (whatever that is), and it looks increasingly like government may not change much either…I am just trying to do the best I can.

    I do realize that the internet has saved my bacon now for the second time in a decade…what a wonderful tool, encyclopedia, mailbox, investment waystation, catalog site, entertainment evaluator, ticket hub, etc….how did we manage before Al Gore invented it?

    Thanks again, Barry, for your blog, and your reasoned bloggers…

  18. Daniel Hudson says:

    I’m glad you made a post to discuss the true sales, but I would not consider comScore’s results THAT much better of an indicator than ShopperTrak’s. Online sales have historically made up only 5% of Black Friday sales and whether we will continue to see the same percentage again this year is debatable. Plus, have you looked into how comScore gets their sales number? From a quick glace it looks like they have a set of companies that are willing to give them their sales figures and I do not know how many companies these guys are missing.

    On a related note, comScore’s site mentions that YoY Cyber Monday online sales is very good at predicting YoY online sales during the holiday season so waiting to see today’s number from comScore should be beneficial.

  19. nsb123 says:

    A electronic retail shop owner in the area, a collegue’s family member, says typically he has 100K business on Friday after thanksgiving. This year, he has had only 50K.

    The scary thing is that this is in Silicon Valley. Things have not been that bad here on the job front.

  20. ottovbvs says:

    BR: you are right. It’s a ritual like cooking turkeys at Thanksgiving. And it’s mostly total bs. Whenever I visit my favorite stores I always have a chat with a few assistants with whom I’ve struck up relationships over the years and they tell the truth. And the truth is it’s awful! There’s a wider problem here I think and it’s one of the things driving people away from newspapers. Maybe it was always bs and the net has just revealed its flaws but every day the papers are packed with total bs. The Pakistani’s telling you how many terrorists they killed today; the NAR telling you how this is a great time to buy a house because the market has bottomed; admonitions to Obama warning him of Hillary’s plans to run her own foreign policy; car workers in Detroit earning $72 an hour; victory in Iraq; FDR caused the great depression; the reverse reverse Bradley effect reversed; the Goldilocks economy is back; Cramer says he’s been a perma bull for years; it never ends and it’s turning our brains to pulp. Thank god for BR and his ilk.