Commerce Retail Sales Advance Report: YOY Jumps 5.9%

Yesterday, I promised to post the report from Commerce for the advance retail sales numbers. You can access it here. Here is the summary:

  • Change from Previous Month (November 2009 to December 2009): Decrease of 0.2%
  • Change from Previous Year (December 2008 versus December 2009): Increase of 5.9%


However, the big disappointment was that for the 12 months total sales for 2009 were down 6.2 percent (±0.2%) from 2008. That is a huge change from last year, probably reflecting the continued softness in the overall economy. Hopefully 2010 rings better.



Well, the NRF was Not Right After All

On November 13, I wrote: If NRF is Right, Not Much Holiday Cheer. In the article, I disagreed with NRF’s projections of lower holiday sales, since all other indicators just did not point to a weak holiday season. Well, the NRF was not right after all!

Most numbers now show that the sales for the holiday season for 2009 did rise.

Data from MasterCard Advisors’ SpendingPulse showed that the increase was as much as 3.6% – see the news article from Bloomberg here.

ShopperTrak now reports that retail sales increased 1.7 Percent for 2009 holiday season even as the foot-traffic declined. Could the decline in foot traffic be a result of increased online retail?

Retail Indicators Branch of the Census Bureau will release their advance retail trade numbers for December 2009 tomorrow. Most likely those numbers will reinforce what we have been hearing so far. So don’t hold your breath, but do come back to check the release tomorrow. 


Commerce says Retail Sales up by 1.2% Without Autos

Well, that is really good news. On Nov. 13, I wrote that there is a very good likelihood that retail holiday sales this year will be better this year than last. This is a view not shared by NRF, though I would stick to it. That has been the trend so far and I think it is going to continue through the rest of the season. When compared to November, 2008, this month’s numbers are up by 1.9%! Click here for the news release from the bureau.

The best part is that while the total retail sales rose by 1.3%, most of the rise happens to be the real retail, as in without the autos. Autos did not contribute heavily to this number so that the retail without autos rose 1.2%. However, autos sales rose as well by 2.0% (6.7% over November 2008 numbers).

All in all, a definite up-trend.


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Clicks Win Over Bricks

Here are the final tallies for the holiday retail sales so far:

Black Friday Weekend Sales Rise 1.6 Percent as Compared to 2008 (links back to the ShopperTrak’s news article).

  • Black Friday weekend retail sales increased a marginal 1.6 percent to a total of $20.5B.
  • Black Friday began the season with a large spend as retail sales totaled $10.66 billion, equaling just a 0.5 percent increase over Black Friday 2008 but representing the largest dollar amount ever spent on the day.
  • Black Saturday posted a slight 0.9 percent rise over last year with $6.107 billion spent.
  • Sunday retail sales increased a seemingly impressive 5.2 percent at $3.73 billion.

Online Cyber Monday sales up 5 pct and number of Web shoppers up 6 percent (links back to the Reuters story).

  • Online shoppers spent 5 percent more this Cyber Monday than they did last year.
  • More consumers flocked to the Web for holiday shopping though they spent slightly less per person.
  • Monday, Nov. 30 was the strongest Cyber Monday in terms of sales since the term was coined five years ago.

Now, some more data from the US Census Bureau: when you compare the rates of decline and rise for total retail and online retail, the online retail help up much better that the total retail. The chart below shows the quarterly change year-over-year for the two time-series. Focus specifically on the data from Q3-2008, the declines in the online retail have been smaller and the improvements in online retail stronger. Few points of note:

  • Online retail seems to have started growing again at growth rates stronger than the total retail. This is not surprising since that has been the trend all along with few exceptions during the recent recession.
  • Notice the trend of the green-line in the second chart – it shows the E-commerce as percent of total retail has a positive trend. The trend has held even during the last two years.  



Lessons for retailers:

  • Build your online stores if you have not yet!
  • When you do, pay attention to the bold new world of multi-channel retailing that you can leverage as a conventional retailer!


© Vivek Sehgal, 2009, All Rights Reserved.

Want to know more about supply chain processes? How they work and what they afford? Check out my book on Enterprise Supply Chain Management at Amazon. You will find every supply chain function described in simple language that makes sense, as well as see its relationship to other functions.

If NRF is Right, Not Much Holiday Cheer

NRF is projecting 2009 holiday sales to be 1.0% lower than 2008, that is on top of 3.4% decline that NRF reports in 2008.

International Council of Shopping Centers (“ICSC”) forecasts 2009 holiday sales to increase by 1.8% over 2008.

We will know in a couple of months who was right. In the meantime, I gathered some data from the census bureau to do a little of my own analysis.



Here are the key takeaways:

  • Retail sales for 2009 show an upward trend, but have stayed in a narrow band so far. The October retail sales numbers are not yet out, but are expected to be good.
  • The inventory to sales ratio for the retail has been steadily declining through the year. It still has some room to go down though not very much.  
  • The manufacturing inventories also decline consistently through the year so far.
  • While the manufacturing new orders have shown a positive trend, it too has stayed within a very narrow band.

So what does this all mean? If NRF forecast of lack-luster holiday sales hold, there is not much reason to assume manufacturing sector will improve either. While GDP did show signs of growth in the third quarter, it is certain that some part of this GDP growth came from the stimulus money injected into the economy, though its effect in manufacturing and retails sectors still remains to be seen. But, if ICSC is right, then the manufacturing orders will need to pick up to build up the manufacturing inventories to boost the retail inventories and support the expected increase in holiday sales.

I believe there is a good chance that the retail holiday sales this year will improve over last year rather than decline. Just like the manufacturing and retail inventories. most individuals have also consumed through their personal household “inventories” and that means that generally the spending must at least be sustained simply to support routine daily activities. Also the overall retail sales levels for 2009 are substantially lower when compared to 2007 and 2008, which would again support the “sustenance” theory. This view is also supported by the personal consumption expenditures numbers from Bureau of Economic Affairs that show a positive trend from January through September.

We will all find out the answers rather quickly. The holidays are not that far off. In the meantime, enjoy the predictions!


© Vivek Sehgal, 2009, All Rights Reserved.

Want to know about supply chain processes? How they work and what they afford? Check out my book on Enterprise Supply Chain Management at Amazon. You will find every supply chain function described in simple language that makes sense, as well as see its relationship to other functions.


Retail Holiday Sales Myth

It is that time of the year again. Analysts are predicting bleak sales for retailers, and consequent hard times for these corporations financially.

One of the closely held beliefs is that that “the holiday sales can account for as much as 40-50% of merchants’ annual revenues”.

You can see that in this news story at CNN that states, “The November-to-December holiday gift-buying months can account for as much as 50% of merchants’ annual profits and sales.”

Or here at Bloomberg which says, “Sales are slowing just as merchants prepare for the holiday selling season, which may account for as much as 35 percent of a retailer’s revenue.”

This is not new either. Check out the predictions for the last year at MSNBC that claimed, “…Retailers typically make 40 percent of their annual profits in the final six weeks of the year.”

So how true is that? Do the holiday sales really add that substantial a revenue to a retailer’s top-line, or profits to their bottom-line. I decided to do some data hunting. Here is what I did. I picked up the revenues and EPS numbers on some of the well known retailers from MSN Money for the financial years 2007, and 2008. Then I applied the following logic to compute the holiday effect on revenues and EPS of these retailers.

  1. Compute the average of revenues for the first three quarters.
  2. Subtract the average in step 1 from the revenue in fourth quarter. This gives us the nominal holiday effect on revenues for quarter 4.
  3. Take the result from step 2, and compute this as the percent of annual revenues. This gives us the percent impact of holiday sales on the annual revenues.

Here is what I found (source of all financial data is MSM Money on 10/15/2008). For the eight well known retailers below comprising of departmental stores, soft-lines, hard-lines the highest holiday impact on revenues 11.95% for Macy’s in 2007, and lowest on -4.67% for Lowes in 2008.





So the notion that a very substantial part of retailers revenues and profits come from holiday sales — as much as 35 to 50% is plain WRONG!!! The fact is that holidays certainly affect the retailers but the impact is far lower than what is generally believed.