Richard Gottlieb

Making sense of Black Friday

Well, it certainly looks like the good news for which we have been waiting. Black Friday sales were up 8.3% over the same day last year. 

It is good news but it is also important to parse the words of these reports very carefully.  The first question we want to ask is where did the numbers come from?

According to Newsday: “Data released yesterday by the National Retail Federation projected that consumer foot traffic for the three-day weekend had increased 4.8 percent over last year, with more than 147 million consumers hitting the stores.” That’s good but it doesn’t make clear how the National Retail Federation derives what appears to be such an exact percentage.

Newsday goes on to explain that: “…preliminary data released Saturday showed that sales for the Friday after Thanksgiving totaled $10.3 billion -- an 8.3 percent rise over the same day in 2006. Those numbers came from ShopperTrak RCT Corp., which extrapolates from sales at more than 50,000 retailers.” Again that’s good news but we later find out that these figures don’t include Target and Wal-Mart. We in the toy industry know that is like Noah counting animals and leaving out the elephants. 

The New York Sun reported that long lines at the Toys R Us Times Square but we have to remember that New York is inundated with foreigners whose money, with the depressed dollar, goes a long, long way. For foreigners, “Mall of America” is now All of America.

So, to see if I could get my arms around this thing, I spoke with one of my key rep contacts. This reprehensive had gotten point of sale reads from his retailers and wrote me as follows: “My sales across the board for last week were HUGE!  It's the best I've seen in years. The consumers came out with a vengeance.  Also Thomas, after 2-3 months of softening, came back strong.”

I called him to find out more. He felt that the message is that the very soft sales trends in October and November were reversed last week. He cautioned, however, that next week will tell the story. If they stay strong, we may be, if not out of the woods, getting near the forest’s edge. 

Here is what I make out of all this information. Demand for product has probably been artificially depressed for the last two months due to the spiral of bad news for the toy industry and the worries over the housing market in particular and the economy in general. The pent up demand finally exploded when triggered by the number and intensity of sales on Friday.  The question is whether this is a temporary surge or a bona fide trend.

It’s good news. Let’s get excited but let’s not get too excited . . . yet!

Posted by Richard Gottlieb on November 26, 2007 | Comments (0)