Black Friday

One of the things that any student of psychology can tell you is that what we intend to do and what we actually do are often miles apart.

To wit: the plethora of surveys this time of year asking people what their intentions are for the holiday shopping season. There are a myriad of flaws in this approach, ranging from well-intended  estimatees that turn out to be wildly off to self-aggrandizing respondents whose self-deception significantly skews these surveys.

For example, we previously mentioned Conference Board’s survey: "U.S. households are expected to spend an average of $471 on gifts
during the holiday season, up from last year’s estimate of $449."

All this tells us is that when asked, people say they believe they will spend $22 more than last year. What it does not reveal is how much they will actually spend, or how retail stores are doing in their 2007 holiday sales. Many people who cite these surveys often fail to mention that small but important tidbit.

The former grand-daddy of relying on bad surveys, the National Retail Federation (NRF), seems to have found religion this year.

Citing Economic Concerns, NRF Forecasts Holiday Sales Gains of Four %
The National Retail Federation today released its forecast for the upcoming 2007 holiday season, predicting that sales will rise 4.0 percent this year to $474.5 billion*. 

“Retailers are in for a somewhat challenging holiday season as consumers are faced with numerous economic obstacles,” said NRF Chief Economist Rosalind Wells. “With the weak housing market and current credit crunch, consumers will be forced to be more prudent with their holiday spending.”

The 2007 holiday sales increase is expected to fall below the ten-year average of 4.8 percent. It would represent the slowest holiday sales growth since 2002, when sales rose 1.3 percent.

I would suspect that many retailers will be thrilled if they can cajole a 4% gain in sales this year. The discounting has been fast and furious, led by Wal-mart, who cut prices on over 15,000 items, and did so around Halloween — way earlier than usual.

The nervousness is apparent not just in the discounting (see: Retail Desperation on Display in Early Hours), but in the increasing race to open earlier and earlier on Black Friday. The ultimate early gambit: Moving  BLACK FRIDAY to Thanksgiving day:

By staying open on the holiday, those retailers got a head start on
their competitors — though not by much. Other national chains,
including Kohl’s and J. C. Penney, rolled back the start of their
after-Thanksgiving sales to 4 a.m. Some stores that remained closed
yesterday, including Circuit City and Best Buy, encouraged consumers to
spend part of the holiday shopping online by offering special deals
just for the day.

Thanksgiving used to be one of the few
“untouchable days,” along with Christmas, said Doug Fleener, president
of Dynamic Experiences Group, a consulting firm in Lexington, Mass.
“It’s one of the few days that the retail employees should get to spend
with their families.”

Indeed, in Massachusetts it is illegal for
stores to open on Thanksgiving. But around the rest of the country in
the last several years, more stores have chosen to try competing with
holiday rituals, Mr. Fleener said.

Rising Early, Not to Start the Turkey, but to Shop


Since I’m in Chicago for the holidays, we usually go to shops we cannot get to in NY — like the Land’s End Outlet store. But that’s a visit for Friday, not Thanksgiving Day.

Its bad enough that the crass commercialization of the holiday season now reaches back to before Halloween, but opening on Thanksgiving is more than tacky — it reeks of desperation . . .



Citing Economic Concerns, NRF Forecasts Holiday Sales Gains of Four Percent

NRF, September 20, 2007

Retail Desperation on Display in Early Hours
NYT, November 23, 2007

Rising Early, Not to Start the Turkey, but to Shop
NYT, November 23, 2007

Consumers Slow to Start Holiday Shopping, According to NRF Survey

NRF, September 12, 2007

Consumers in a Festive Mood as the Holiday Season Approaches
Conference Board, Nov. 20, 2007

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What's been said:

Discussions found on the web:
  1. Marcus Aurelius commented on Nov 23

    Money today is worth much more than money tomorrow. We don’t just want it, we want it NOW. How many falling dollars can you catch before the buzzer?

  2. hal commented on Nov 23

    Good Morning Barry-welcome to cold but sunny Chicago:

    While watching TV with family yesterday it struck us all how much marketing is being done on TV by “Madison Ave”.

    Got to have this and got to have that.

    The ones I best are the Lexus “get a Lexus for Xmas” for your spouse and of course go out and spend hundreds if not thousands for a diamond ring for your spouse.

    We are all constantly being bombarded by this “stuff” and admittedly it does feel good to go out and buy the stuff with credit (as aptly put by the credit card companies)

    I just wonder what happens in January. Somewhere the consumer has to get in trouble–wall street can’t carry the country.

  3. Chief Tomahawk commented on Nov 23

    Hey BR…

    If in Chicago, go for one of the Brazilian steakhouses…

    Fogo de Chao is just north of the Loop (downtown):

    Lunch: Monday-Friday 11am-2pm

    Dinner: Monday-Thursday 5pm-10pm; Friday 5pm- 10:30pm; Saturday 4:00pm-10:30pm; Sunday 4pm- 9:30pm.

    661 N. LaSalle Street, Chicago, Illinois 60610

    Phone: 312-932-9330 / Fax: 312-932-9388

  4. Marcus Aurelius commented on Nov 23

    “wall street can’t carry the country.”

    Posted by: hal | Nov 23, 2007 9:52:04 AM

    if by “carry the country,” you mean “loot the treasury,” I’m in complete agreement.

  5. commented on Nov 23

    Marcus Aurelius:

    Then you should have heard what University of Maryland business professor Peter Morici said when he won the “Forecaster of the Month award”:

    Wall Street is infected by “petty corruption.” Morici claims, “There’s a petty corruption that infects Wall Street firms. Everyone feels entitled to make $40 million a year.” The high salaries are justified by “lying to Americans about the value of their creations.”


    “Beware Of This One-Two Punch”

  6. hal commented on Nov 23

    I mean the rest of the country works for them–they make money and buy stuff–whatever has not been outsources the rest of the us can supply for the looters. :-)

    It would be nice if they tossed out more than a few crumbs.

  7. hal commented on Nov 23

    Forget the brazilian steakhouse:

    go high end: Tru or Everest. :-)

  8. Schunder commented on Nov 23

    Discounting fast and furious?

    This is relevant?
    The size of discounts isn’t very relevant either if one doesn’t take into account what the starting price is. Much stuff in stores were not in stores last years.

    Maybe the stores have lower margins maybe they don’t. Maybe all this talk of discounts is just to get a frenzy going. You trust retailers? Please give me a reason to believe that retailers should be believed. I’m not long the retailers, but your uncritical analysis of the retailers statements may cause people to be short the retailers.

    Retailers are better at marketing than any of us are at interpretting their skills. Be cautious.

  9. Chief Tomahawk commented on Nov 23


    Though I will say going for all-you-can-eat steak on the heels of a large turkey meal is poorly timed. Brazilian steakhouses, provided it’s done well, rock.

  10. norman commented on Nov 23

    The crassest ‘Black Friday’ shopping position I learned of was J. C. Penney opening their stores at 4am. This means that their employees probably have to wake up (or not go to sleep at all) at 2am. And JCP has a whole part of their website devoted to being a concerned citizen, NOT!!

  11. hal commented on Nov 23

    Here is a WSJ story on Wal mart operations (in Illinois) –talk about good corporate citizen.

    Why Wal-Mart Set Up Shop in Italy
    Retailer Has No Stores,
    As Tax Spat Lays Bare
    November 14, 2007; Page C1

    More than 4,500 miles separate a small Wal-Mart Stores Inc. office in Florence, Italy, from the company’s dozens of Illinois retail outlets. But thanks to a convoluted tax arrangement, court records show, Wal-Mart’s Italian operation has helped the giant retailer cut its state tax bill in Illinois by millions of dollars a year.

    Wal-Mart set its affairs so that its Italian outpost is the only operating unit of a real-estate subsidiary that controls billions of dollars of the retailer’s property in Illinois and other states. Because technically its only employees are based in Italy, the real-estate unit claims its operations are foreign, exempt from Illinois corporate income taxes.

    Earlier this year, the Illinois Department of Revenue objected to the Italian tax maneuver, demanding $26.4 million in back taxes, interest and penalties. Wal-Mart paid the amount in dispute and then sued the state for a refund, according to a complaint filed in May in Illinois Circuit Court in Springfield, Ill.

    A Wal-Mart spokesman declined to comment beyond a prepared statement: “We have a disagreement with the state of Illinois over our tax liability last year, and we’ve asked a judge to resolve that for us.” He declined to explain why Italy was chosen as the home of this particular foreign operation or whether Wal-Mart has other such arrangements.

    The dispute with Wal-Mart is part of a wider effort by some states to crack down on what they believe is abusive use of so-called 80/20 companies. These companies are domestic subsidiaries that conduct at least 80% of their business overseas. States typically don’t tax income from outside the U.S., and many companies have used 80/20 subsidiaries to legitimately shield foreign operations from state taxation.

  12. Estragon commented on Nov 23


    WalMart, like any other company, has an obligation to shareholders, employees, and customers to take advantage of whatever legal means are available to it to minimize tax obligations.

    I suspect this sort of tax arbitrage is extremely common, to the point that if we want them to pay higher US taxes, a cut in rates may be the best way to do it.

  13. hal commented on Nov 23

    these are not tax breaks just sitting out there: these are tax schemes that lawyers and tax cpas try to find and is definitely not in the spirit of our society. Not even sure if its the letter of the law.

    I know cause I am a retired cpa tax person who found all sorts of loopholes but never went to court even when challenged by tax audits-they decided not to take it further.

    I understand what you are saying bit if you look at a wmt, they do not pay for infrastructure improments when building new stores, get prop tax relief as incentive to locate a store and all thats left might be sales tax generated and I have to wonder what the payback is to local govt, which, incidently, is in a pile of financial trouble.

    No, we have a take and greed society at too many levels.

  14. erpij commented on Nov 23

    When these corporations skip out on taxes, that means we pay more to make up for the shortfall. The weight of the tax burden is on the bottom 98% of citizens, and it’s not like any of that money is trickling down to us – unless it’s in the form of layoffs, stagnant salaries, etc. These policies are in part what drive people to buy cheap garbage out of desperation at places like Wal-Mart.

    Anyway, who on earth can defend the “corporations are obligated to brutalize the American citizen”? What kind-of society should allow that? Fair business, fine, but not business above 98% of the public.

  15. Estragon commented on Nov 23


    I agree with you completely on the infra improvements etc. In fact, just wait until the leases on these basically disposable stores expire. I bet you’ll see WMT exact lots of concessions from the owners and municipalities with very credible threats to close. As you note though, municipalities often encouraged this mode of development. One thought I had on recapturing infra costs was to levy a local per-spot tax on non-residential parking, which few municipalities do. Such a tax would have the advantage of helping to fund existing infra maintenance, discourage unsustainable additional infra, be relatively simple to collect, and be relatively difficult to avoid.

    Anyway, income taxes are a lousy way to get the revenue needed. The reality is the US is uncompetitive on corporate tax rates, and it isn’t surprising that corps find ways to avoid US corp tax. On a macro level I suspect it goes some ways in explaining the so-called “dark matter” in returns in the net international investment accounts.

    Whether a disputed issue goes to court likely depends a lot on the amount of money involved. Presumably, the WMT case involves significant sums, so it isn’t surprising that it’s pursued more vigorously than lesser cases might be.

  16. Eric Davis commented on Nov 23

    Off Topic… Is there seriously a debate on CNBC about getting rid of public schools?

    That actually made me sick.

  17. cm commented on Nov 23

    According to the bible, every seventh day has been ordained for resting. What is the difference between running business as usual on Sundays and on holidays, other than a degree of residual pretense of “family values”?

  18. wunsacon commented on Nov 23

    >> I suspect this sort of tax arbitrage is extremely common,


    >> to the point that if we want them to pay higher US taxes, a cut in rates may be the best way to do it.

    Better yet, properly budget for enforcement and/or create harsher penalties to encourage compliance with existing laws.

  19. tyoung commented on Nov 23

    Forget the brazilian steakhouse:

    go high end: Tru or Everest.

    You must have serious bucks or else somebody else was paying. I prefer Blackbird or Bin 36.

  20. erpij commented on Nov 23

    20 billion dollars in sales today – the economy is just fine again. Now, back to business.

  21. Barry commented on Nov 23

    Uh, you want to cite a source for that numerical data?

  22. Joe Bel Bruno commented on Nov 23

    Holiday sales figures do little to rally investors after Black Friday

    NEW YORK – Investors might not want to place too much faith in the notion that a strong start to holiday shopping might breath new life into the stock market.
    Black Friday may have gotten the season off to a good beginning: many retailers reported, anecdotally, seeing more people than last year taking advantage of the day’s deep discounts.

    One day does not a season make, however. Investors want to see the euphoria of the first shopping day of the season persist all the way until Dec. 25, and beyond, before they place a bet on how Christmas went.

    “Consumer spending is always something we pay attention to, we want to see higher traffic on Black Friday,” said Ryan Larson, senior equity trader at Voyageur Asset Management. “But, results from just one day isn’t going to do it – the follow-through is more important from a trading standpoint.”

    Stores are hoping for a surge of shoppers during the holiday shopping period after many consumers pulled back in recent months. Merchants hope longer hours and deeper discounts will help make sales goals even though consumers are facing a barrage of troubles such as a slumping housing market, tight credit and rising fuel prices.

    So far, the gimmicks seem to be working. Shoppers shrugged off lead-tainted toy recalls and worries about the economy and jammed stores before dawn Friday to grab discounted TVs, toys and the Nintendo Wii.

    But investors need to see more empirical evidence – such as same-store sales figures – before determining how retailers fared during the period, said Larson. Beyond any dramatic comments from the likes of Wal-Mart Stores Inc., the interpretation of sales data might shift as analysts get more information later next week.

    That’s what happened last year. Investors, worried that consumer spending was in the midst of a major erosion, sent the Dow Jones industrial average down 1.2 percent on the first full session after Thanksgiving. But, experts later felt it wasn’t all that bad – and stocks that week were able to rebound.

    In the past decade, the Dow – which now includes Wal-Mart and Home Depot Inc. among its components – ended lower on the first Monday after Thanksgiving in 2004-06, 2001-02, and 1998-99. It finished higher in 1997, 2000, and 2003.

    The biggest post-Black Friday surge during the past 10 years was in 2003 – when the blue chip index soared 1.16 percent. But that had more to do with a pair of economic reports on manufacturing and construction than a strong retail sales reports, according to analysts.

    One reason offered for the retreat is that stocks tend to run up in the week ahead of Black Friday. Since the start of the decade, the Dow has only shown declines in 2000, 2001 and 2006. Analysts say that could represent some bullishness by investors ahead of holiday sales data, and because the week of Thanksgiving tends to have light trading.

    This past week, major indexes fell amid growing concern that the unfolding credit crisis will hurt the already weakened financial system adn could spill into the broader economy. The Dow fell 1.49 percent during the week, the Standard & Poor’s 500 index shed 1.24 percent, and the Nasdaq composite dropped 1.54 percent.

    Peter Dunay, investment strategist at Leeb Capital Management, said Wall Street is too preoccupied with the credit market turmoil to worry that much about holiday shopping. So far, the nation’s biggest banks have written down about $75 billion worth of securities tied to subprime mortgage-backed debt – and that number could grow quickly as the fourth quarter closes.

    “We’re always hoping for good news from the consumer,” said Dunay. “But, it doesn’t matter how much consumers spend when you’re talking about going on $80 billion of writedowns. The financial sector is just a wreck.”

    This past week, the Standard & Poor’s 500 index had lost all its 2007 gains before recovering on Friday – its up 1.58 percent this year. The Dow is up 4.15 percent, and the Nasdaq composite is up 7.51 percent.

    “The only side that’s interesting is we’re down so much in recent weeks, and expectations for consumer spending are a little lower,” Dunay said. “Regardless, the tough part for the market isn’t the retailers – its that these financials are carrying a boulder on their backs.”

  23. hal commented on Nov 23

    One of the issues upsetting me current day is the corp bonus system.

    Currently, for the most part, the managers get an annual bonus based on current year performance. Consequently implemented ideas do not have a chance to “play out”, and often the manager has gone on to greener pastures (to screw up) before one of his ideas goes south.

    Twenty years ago we had rolling bonus plans whereby , for example, if I had a tax saving idea I did not get bonused on it until we got past the 3 year tax audit time frame. Op managers would have a holdback on calculated bonus to see how things played back.

    Therefore, someone at say Bear Stearns or Citi would not be made filthy rich (looters was the earlier term used here) on something that blew up for everyone else.

    The difference then and now is our mistakes were small–today these folks are putting not just a company in jeopardy, but perhaps the banking system.

  24. Woodshedder commented on Nov 23

    erpij- I’d like to see the data to back up your statement about the tax burden being on the bottom 98% of the citizens.

    Norman- how do you propose JC Penny stays in business and thereby effectively ensures employment for its employees if not by opening early? Do you propose the citizens bail out JC Penny so its employees do not have to wake up at 2:00a.m.? Do you suppose that the employees are forced by gunpoint to work for JC Penny? Do you suppose they were held, knives at their throats, and made to come in at 4:00a.m.?

  25. Greg0658 commented on Nov 23

    Woodshedder – all corporate profits come from the consumer – since 98% of the population is a common laborer consumer – there you have it

    I guess I’m jealous that I’m not a Walton – NOT

    Someday you may come up with that Big Plan of Corporate Domination – and you can say to all who will listen – I Won The Game – BooYah

  26. Dave commented on Nov 23

    I have a great example of people saying they plan to do something at a higher rate than they actually will. In a recent study about the entertainment preferences of conservatives, liberals, and moderates, all participants were asked how likely they are to vote in the national elections. All three groups had at least 96% respond “very likely.”

    The last time voter turn out even reached 65% was 1908:

  27. David commented on Nov 23

    Merry Christmas.
    Yes, I spent too much money today, I do not need anymore credit card debt. However, do have a Merry Christmas.
    “At Christmas I no more desire a rose – Than wish a snow in May’s new-fangled mirth; But like of each thing that in season grows”
    William Shakespeare

  28. Winston Munn commented on Nov 24

    Whether or not the holiday season shopping is good, decent, fair, or even bad, it will matter little to the overall decline in demand that is occuring.

    From Financial Times:

    Quote: “The US receives a fifth of all Chinese exports, making it the second largest destination for Chinese-made goods after the European Union.

    China’s central bank estimates that every 1 per cent drop in US economic growth translates into a 6 per cent fall in Chinese exports.

    Exports to the US have slowed significantly since the start of the year, dropping from a 20.4 per cent year-on-year rise in the first quarter to a 15.6 per cent increase in the second. Growth fell to 12.4 per cent in the third quarter following the eruption of subprime loan problems.” End Quote.

    The entire U.S. economy as engineered by the Federal Reserve is based upon a flawed model – that supply-siding credit can continuously spur aggregate demand. Wrong, wrong, and wrong!

    A country’s wealth can never be increased by coercing its populace to forego the benefits of increased productivity in order to facilitate present consumption. Eventually, you reach a point of saturation where a debt-burdened population can no longer increase spending because of cost of debt service.

    At that point in time, the only thing that supply-siding debt can accomplish is bubble creation in a vain attempt to continue a false expansion.

    However, it looks like this poorly played game is finally about to end.


  29. Francois Theberge commented on Nov 24

    Before anyone claim that retail sales has been/are/will be good/great, shouldn’t we look at the net income dollar figures?

    With all these deep discounts, longer hours and higher fixed costs, I’m having a hard time believing the anecdotes, number of cars in the lot and what have you.

    On the other hand, if retailers’ net income in Q4 2007 turns out to be higher than in Q4 2006, AND, YOY comparative states sales tax receipts correlates with said income, then will we know that the consumer ain’t dead yet.

    Otherwise, the whole wooloo-wooloo is like GranMa stories: nice to hear, with warm fuzzy feeling inside, nothing more.

  30. iio commented on Nov 25

    I work for a major retailer. Our Friday and Saturday sales this year exceeded our Fri/Sat/Sun sales last year. These results exceeded our most optimistic projections. Apparently the consumer is operating with a very deep reserve tank.

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