Maybe Shoppers Should Send a Thank-You Note to the Gloomy Business Press
Old Media reporters have worked themselves into such a lather trying to talk down the economy that you have to wonder if retailers got lulled into believing them.
The Associated Press's report on Black Friday sales by reporter Anne D'Innocenzio went through the normal good news/"yeah, but" routine (bolds are mine throughout).
First, the good news:
The nation's retailers had a robust start to the holiday shopping season, according to results announced Saturday by a national research group that tracks sales at retail outlets across the country.
According to ShopperTrak RCT Corp., which tracks sales at more than 50,000 retail outlets, total sales rose 8.3 percent to about $10.3 billion on Friday, the day after Thanksgiving, compared with $9.5 billion on the same day a year ago. ShopperTrak had expected an increase of no more than 4 percent to 5 percent.
But in bringing out the supposed "bad news," D'Innocenzio may have inadvertently exposed a retailer miscalculation:
In an apparent sign of desperation, the nation's stores ushered in the official start of the holiday shopping season on Friday with expanded hours, including midnight openings, and a blitz of early morning specials that were more generous than a year ago. J.C. Penney and Kohl's Corp. (KSS) opened at 4 a.m., an hour earlier than a year ago.
The strategy appears to have worked, as shoppers jammed stores in record numbers for early morning deals on Friday. Martin noted that judging by the strong figures on Friday, stores were able to sustain strong sales throughout the day.
I think "desperation" is truly a disgraceful term to describe a retail sector that has mostly been, and continues to be, both growing and profitable.
Anyway, it's quite possible that retailers misjudged the need for deep discounts because they bought into Old Media gloom over high gas prices, subprime mortgage problems, and flat-to-declining home prices. In overreaction to all of this, they may have lowered prices more than necessary to generate store traffic and sales.
If that's the case, shoppers owe the gloom-and-doom press a hearty thanks for all the misdirection-based bargains they were able to, uh, gobble up this past weekend.
The fact is that consumers are in pretty good shape. A Conference Board released a few weeks ago reported that an all-time record 63.5% of American households had "disposable income" in 2006, up from 52% just a few years ago. This exactly the type of income that would go towards gift-buying splurges. A separate report issued by the Treasury Department shortly thereafter tracked the economic progress of specific households over a nine-year period (1996-2005), and showed that their median real income increased a mind-boggling 24% during that period -- over twice the 11% increase recorded in the nine years before that. More recent government reports on personal income confirm that income gains continue to outpace inflation.
Perhaps retailers will learn that they buy into Old Media economic gloom at their peril. Christmas-season shoppers hope that their education won't start until after the New Year.
Cross-posted at BizzyBlog.com.