Only 7 shopping days left!
Next week is "Super Saturday" (they seem to just make this stuff up every year) but I was not overly impressed by the crowd at the Wayne Town Center Mall yesterday. We were not even shopping, just picking up some cards and having lunch (the food court was packed). There were plenty of people, too be sure but, like us, they didn’t seem to be carrying very much actual stuff. The clear exception, in my brief trip into the mall, was the Apple Store – where they couldn’t have packed more people in if they were just giving it all away – boxes were flying out of that place!
As to the other stores, Tina no longer leaves the house to buy things for Christmas – AMZN ships everything for free (annual $79 Plus Membership, which includes movie rentals now) and has gift-wrapping and card-writing and often the best prices so it really doesn’t make sense not to use them.
Personally, I can’t buy like that – I need to see things and I kind of like poking around stores and talking to people but, then again, I also pay the people in the mall to wrap my gifts as I’m sure as hell not going to spend a day doing that (and, despite having spent my 16th Christmas working at the Macy’s gift wrapping counter – I pretty much suck at it). Fortunately, I’m grounded enough to know this is not how normal people behave – even in upscale North Jersey.
Grounding ourselves is why these surveys are so valuable. We have a lot of smart Members from all walks of life with combined centuries of experience – who better to ask about shopping conditions all over the country, and the World?
The official estimate from the National Retail Federation is that there will be $469.1Bn (pretty exact for an estimate) spent this holiday season, which is an increase of 3.8% over last year, which was a 5.2% increase over 2009 ($437Bn), which really sucked! Still, it did not suck so much that $469Bn is not an new record for Q4 shopping.
“After strong sales reports in October and November, along with a successful Black Friday weekend, retailers are cautiously optimistic that this season will turn out better than initially expected, bringing added stability to our recovering economy at a time when America needs it most,” NRF President and CEO Matthew Shay said. “However, a number of factors, including the debt crisis in Europe and continued political wrangling in Washington, could impact consumer spending this holiday season and into 2012.”
This is important stuff because 42M Americans work in 3.6M stores in America, a country that loves to shop. In fact, we love it so much that gift cards are now one of the top holiday gifts so that other people can have the fun of shopping with your money. Again, I’m old-fashioned and don’t feel like a gift card is a "real" gift but my kids actually put them on their Christmas list and this year they want cards from AMZN, Toys R Us and, most interestingly, the Itunes Store. My kids are certainly not alone. In a First Data survey:
- When asked whether a recipient would rather get a $20 gift or a $25 gift card, 92 percent opted for the gift card
- When asked whether a recipient would rather get a $25 gift or a $25 gift card, 87 percent opted for the gift card
- When asked whether a recipient would rather get a $30 gift or a $25 gift card, 79 percent opted for the gift card
- When asked whether a recipient would rather get a $45 gift or a $25 gift card, 52 percent opted for the gift card
I find the last item VERY interesting, 52% would rather get a gift card that’s half the value of an unknown gift – perhaps a good indication of how lousy people are at picking out good gifts for each other! Still, we need to be careful when we hear about these trends as gift card sales are expected to be $28Bn this year, up significantly from $24.8Bn last year but representing just 6% of Holiday Sales. CSTR machines now interestingly pop out gift cards in exchange for your change. To some extent, the rise of gift cards does shift that 6% off the holiday quarter and into Q1 as most retailers do not recognize the sale until the gift card is redeemed (despite the fact that they have the cash). Also, despite all the fuss, on-line sales are still under 10% of all retail (good growth prospects for AMZN!) – here’s a good chart from last year:
Still 10% of the sales on-line explains 4M jobs going away (as does inflation meaning less stuff is being sold for more money). Amazon only employs 33,700 people to replace 4M retail sales associates – now that’s efficiency! Also, you would think that’s not so good for the REITs, and we have a massive, empty, $2Bn mall right here in New Jersey that proves you don’t have to go to China to find very poorly thought out planning projects. What was originally aptly named Xanadu has now been horrifically and ironically been renamed "The American Dream" and is now scheduled to finally open in late 2013 – a full decade after this nightmare began!
I’d like to hear about your own shopping experiences and I’d really like to hear from people who own stores. According to the National Retail Association, most shoppers are only half done with Christmas shopping. That seems crazy but they said the same thing least year and they were right and this year we have an extra day so I guess it’s going to be a crazy week in the malls. The Retail stores are open all kinds of crazy hours this weekend so staffing costs will be high and I do hope it works out for them, for all our sakes!
It’s very hard to get a good read from the news because they are paid by retail advertisers to encourage you to shop so they’re not going to interview a store owner who says "This is the worst holiday ever, I’m thinking of setting fire to the store for the insurance money." No, all you hear is the good stuff but we need to know what’s real so we can make good investing decisions so if you are in retail, or know anyone in retail – please help us out and let’s try to get some good numbers (comparisons to last year and "normal" years, etc.) in our last week of shopping.
If you are out shopping, all you have to do is keep your eyes open when you go to the stores, not just as to whether they are busy but as to whether people are actually buying thing and what kind of things they are buying – then just tell us what you saw.
Obviously, we care the most about stores we can invest in but general observations are good too. This is going to be make or break for the holidays but I think a lot of high expectations are already built in and this survey is a great way for us to gian insight as to what’s hot and what’s not around the country.
Try to include the symbols for the companies you discuss and be sure to give us a good idea, geographically of where you are shopping. Last year we got a great picture of what was going on in the country and it kept us from falling for the media hype about holiday shopping last year.
Only by comparing many people’s experiences can we begin to get a good picture of the retail situation in this country, Thanks!
