Holiday Season Dollars: We (Somehow) Were Right

Written by Evan Schuman
January 14th, 2010

Back in October, the National Retail Federation (NRF)—through its chief economist—issued its annual projection of how the 2009 holiday season would fare financially. That prediction was a one percent drop in revenue compared with the identical 2008 period. StorefrontBacktalk thought that was absurd, and we did our own prediction, which is that the season’s revenue would actually be up slightly, a figure we estimated would be an increase of “1.5 percent to 2 percent.”

Well, the NRF issued its final official tally Thursday (Jan. 14): an increase of 1.1 percent. For our team, which never did better than a C- in economics class, that ain’t too shabby. For the record, we knew the figures would be released about now and were fully prepared to eat crow if we had to. Glad we got it a lot closer than the NRF did. Personally, we hate eating crow.

But NRF did delve into a lot more detail than we did. From Thursday’s statement: “Apparel was a big driver for retailers, as clothing and clothing accessories stores for December increased 7.0 percent year-over-year and dipped 0.6 percent from November. Sporting goods, hobby, book & music stores also performed well, with December sales increasing 3.9 percent from last year and up 1.6 percent month-to-month. Health and personal care stores continue to be a bright spot in retail, with year-over-year December sales increasing 4.8 percent and monthly gains of 0.8 percent. The weak housing market continues to impact the sale of home furnishings, with December sales of furniture and home furnishing stores decreasing 3.5 percent from December 2009 though increasing a slight 0.3 percent from the previous month.”

“With an eye on managing inventory and maintaining lower price points, retailers did a tremendous job of planning for the holiday season,” said NRF Chief Economist Rosalind Wells. “While the consumer appears to be spending again, double-digit unemployment numbers will remain an impediment to maintaining this momentum.”

The NRF’s figures showed retail industry sales (which exclude automobiles, gas stations and restaurants) for December rose 2.3 percent unadjusted year-over-year and fell 0.5 percent seasonally adjusted from November. “As a result, preliminary 2009 holiday sales, which combine the full months of November and December, rose 1.1 percent to $446.8 billion, surpassing NRF’s projected decline of 1.0 percent.”


3 Comments | Read Holiday Season Dollars: We (Somehow) Were Right

  1. Doron Levy Says:

    I have to admit, I was part of the naysayer camp before Christmas and I’m encouraged by the increase but (and this is a big but) we shouldn’t be jumping for joy for 1.1 percent. You can’t tell me that cost of goods sold and overhead didn’t increase at least 1.1%! More like 3-5 percent. I’m going to smile at this number but I’m not taking out my party hat yet until I see actual margin intake numbers. With all the insane sales and low inventory allocations, I bet most big boxes were flat to negative in the profitability department. I was always taught that if you couldn’t pull in double digit increases year after year, you were dying and I suspect we will see some more big names die off in the coming months.

  2. Evan Schuman Says:

    Editor’s Note: Doron’s right. The key point we were initially trying to make was that, back in October, with all of the data then available, we simply couldn’t see how the 2090 holiday could have been worse than the prior year’s disaster. Pentup demand, among about 20 other factors, simply wouldn’t allow that, unless some other catastrophe kicked in, which (fortunately) didn’t happen. But we didn’t envision a huge rally, which is why we projected a 1.5 percent increase. The ultimate 1.1 percent increase was confirmation. The bigger question was: What did NRF’s chief economist see in October that prompted such a negative projection? Whatever they were fearing didn’t materialize.
    But to Doron’s point, yes, continued annual increases of 1.1 percent–especially measured against the increased cost of sales–will be very bad news.

  3. Bob Phibbs, the Retail Doctor Says:

    Great point Even that you weren’t the big economic gurus, how is that even you could figure this one out and senior economicts working for NRF couldn’t?” The fact is retail sales predictions are notoriously wrong – in fact 9 out of the last 10 years which I wrote about in my blog at The reason it is a big deal to me that they are perennially wrong is that fear stops retailers from buying and hiring which ultimately serves no one any good.


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