Lies, Damned Lies and Black Friday sales figures

firesale-savingsStories about the success of Black Friday/Cyber Monday  are as inevitable as taxes and death but nowhere near as reliable. It goes like this: "Great Black Friday sales numbers mean a big shopping season. Insert somebody’s numbers to support this and then a quote or two from an analyst." Publish, forget, and hope no one notices that they are ALWAYS — even in good economic times — WRONG. In the past these stories have been an embarrassment. Now they are colluding with retailers to overcome the facts in the hopes that somehow shear massive denial will rescue us.

This isn’t whistling past the graveyard, it’s renting a whole symphony orchestra.

Although the actual sales figures would later show a whopping 0.5% increase in sales, here’s the AP’s early report on what should be called Bogus Saturday:

The nation’s shoppers took advantage of deals on toys and TVs with some renewed vigor in stores and online on Black Friday after a year of concentrating their spending on basic necessities. Though the first numbers won’t be available until Saturday, early reports indicated bigger crowds than last year, with people buying more and even throwing in some items for themselves.

“Though the first numbers won’t be available until Saturday”? That’s shorthand for “we’re making this up.”

Stores were encouraged that shoppers appeared to be a little freer with their spending. Best Buy, Sears Holdings Corp. and Mall of America, as well as mall operators Taubman Centers and Simon Property Group, offered signs people were buying more than last year.

“Offered signs”? Whiskey Tango Foxtrot?

An average of about 1,000 people were in line for midnight openings at Toys R Us stores, CEO Gerald Storch said. After setting aside 100 Zhu Zhu Pets hamsters for each location, Toys R Us came back with several shipments of the hot toy for several of its stores Friday.

And Mr. Storch is certainly an unbiased observer with no vested interest in the outcome of this story. Fortunately Mr. Storch’s “facts” were backed up by none other than Macy’s CEO Terry J. Lundgren. Lundgren said more than 5,000 people were at Macy’s Herald Square store in New York early Friday, slightly more than last year. (WHERE DO THESE NUMBERS COME FROM? Is there someone whose job it is to count the number of people in line? )

Having passed off the above as news, the AP then goes to a person-on-the-street for further uninformed opinion.

Dondrae May, a manager at a Best Buy in Framingham, Mass., said shoppers started lining up at 4 p.m. Thursday — 13 hours before opening. He said shoppers were filling their baskets with more items than a year ago, when they were shellshocked after the financial meltdown.

Everyone repeat after me: The plural of anecdote is NOT data. The plural of anecdote is NOT data. The plural of anecdote is NOT data. The plural of anecdote is NOT data. The plural of anecdote is NOT data….

At least Bloomberg had the decency to make it clear the adjective for the sales figure was alleged, not proven.

Retailers reported “strong” shopper traffic on Black Friday as discounts on televisions, toys and computers drew budget-conscious crowds across the U.S., the National Retail Federation said.

Although Bloomberg also cites a retail CEO (Best Buy) as saying sales are better, they don’t pass off his opinion as anything but that. (BTW, Storch & Dunn’s questionable numbers are also quoted in the Bloomberg story and in the Wall Street Journal. Some PR agency is earning its commission!)

That said, Bloomberg does pass along this piece of genius seemingly without pausing to ask where these statistics come from:

“There’s a little more traffic than last year across the board, maybe 10 percent,” Bill Taubman, chief operating officer of Taubman Centers Inc., a U.S. real estate investment trust with 24 malls, said in a telephone interview yesterday.

Thank G-d for the Wall Street Journal which had the common decency to run a story poking holes in all these predictions.

Black Friday’s predictive powers are limited. Although the day after Thanksgiving was the No. 1 shopping day in terms of sales last year, when economic turmoil made it a retail free-for-all, it typically is eclipsed by the last Saturday before Christmas. Similarly, "Cyber Monday," the Monday after Thanksgiving, hasn’t been the top day for online sales since the term was created five years ago.

Shoe-thrower shows the power of product placement

bush-shoe2When Muntazar al-Zaidi threw his shoes at President Bush he unintentionally gave the Baydan Sho Co.’s Model 271 one of the greatest endorsements ever.

Ramazan Baydan, owner of the Istanbul-based company, has been swamped with orders from across the world, after insisting that his company produced the black leather shoes. He has recruited an extra 100 staff to meet orders for 300,000 pairs of Model 271 – more than four times the shoe’s normal annual sale. (Nice to see George is creating jobs somewhere!)

Baydan is planning to rename the model “the Bush Shoe” or “Bye-Bye Bush”.

“We’ve been selling these shoes for years but, thanks to Bush, orders are flying in like crazy. We’ve even hired an agency to look at television advertising,” he said.

About 120,000 pairs have been ordered from Iraq and a US company has ordered 18,000 of the shoes, which have been on the market since 1999 and sell at around $41  in Turkey.

Journalists still too lazy to report truth about Black Friday

firesale-savingsBlack Friday/Cyber Monday news stories are as inevitable as taxes and death but nowhere near as reliable. It goes like this: “Great Black Friday sales numbers mean a big shopping season. Insert somebody’s numbers to support this and then a quote or two from an analyst.” Publish, forget, and hope no one notices that they are ALWAYS — even in good economic times — WRONG. In the past these stories have been an embarrassment at best. This year they are irresponsible. We have gone from whistling past the graveyard to bringing an entire symphony of wishful thinking.

This is the press release version but it isn’t all that different from the putative news stories on the same topic:

According to the National Retail Federation’s 2008 Black Friday Weekend survey, conducted by BIGresearch, more than 172 million shoppers visited stores and websites over Black Friday weekend, up from 147 million shoppers last year. Shoppers spent an average of $372.57 this weekend, up 7.2 percent over last year’s $347.55. Total spending reached an estimated $41.0 billion.

Which is almost exactly what CBS News “reported”:

Despite all the talk of an economic slowdown, the holiday shopping season is off to an “energetic” start, according to a retail survey out tonight, reports CBS News correspondent Randall Pinkston. The survey says 172 million shoppers visited stores and websites this weekend – up 15 million from last year, and the average shopper spent more than $372, up 7.2 percent from a year ago. (The “analyst” in the CBS story is “a manager for the largest mall company in America.”  He says its going to be a great shopping season. What a surprise!)

And CBS is hardly alone. There’s this from MarketWatch:

Then, as inevitably as the Cubs not making the World Series, we get:

After a robust start to the holiday season, many stores struggled with disappointing business in December, and a shopping surge in the final days before and after Christmas wasn’t strong enough to make up for lost sales.

The above quote is from last year when the mirage of our economy was still going strong. Fortunately(?) this year we are not having to wait for the final numbers to come in for corrections to the original stories to be run.

But the question remains as to why the above articles don’t run every year. The only story there could possibly be here is if someone did a little research to see if there is EVER any correlation between the Black Friday numbers and actual holiday season shopping results.
And on the topic of Cyber Monday — it is nothing but PR piffle. The heaviest online shopping days of the holiday season are a week before Christmas as the shipping deadlines approach.

Chrysler gambling with sales incentive that helps pay for gas

Not sure if this is brilliant or depressing. Or both.

Chrysler announced Monday an offer that caps the price of gasoline at $2.99 a gallon for three years for people who buy or lease new vehicles from Wednesday through June 2. The offer is based on 12,000 miles of driving per year at the vehicle’s rated fuel economy. Customers will get a card for buying gas that is linked to their own charge account, Chrysler said. The customer will be billed $2.99 a gallon, and Chrysler will pay the rest.

I’m sure the honchos in Auburn Hills did their math on this (and when was the last time a US car company didn’t correctly anticipate fuel costs?) but to me it looks like this could get pretty expensive.

The story goes on to point out that at the current $3.61 a gallon average gas price, someone who buys a new PT Cruiser (est. 21 MPG) would only cost the company $1075 per car. That seems a bit much but not ridiculous for a car with an MSRP of $15,285.

However let us take the radical notion that gas prices have not yet peaked. If the price of gas hits $5 a gallon (and I wish that were unthinkable) the total cost to the company hits $3300*. Even if the price “only” hits $4.50 per, the company is on the hook for $2580 per car. Suddenly that PT Cruiser is costing Chrysler a lot.

All of this, btw, assumes something we all know to be false: That there is a relationship between the advertised MPG and what you actually get. If the car actually gets 18 MPG then Chrysler has to pick up the actual difference. At today’s prices that means a mere $150 increase over three years. However at $4.50 it’s about $500 more — which means Chrysler is in essence selling the PT Cruiser for about $12K. For the consumer it’s a great anti-inflation move, for the shareholders though? Well, for gas company share holders it’s great.

The other thing that will contribute to Chrysler’s costs is the fact that consumers will probably buy more expensive grades of gas. Why not always get super premium if it only costs me $2.99?

Here is my own personal indicator of the impact of the price of gas: I am now driving at or below the speed limit. This news so shocked Mrs. CollateralDamage that she briefly put down the latest guide to Disney.

*(In case you’re wondering here’s the formula I used 12000[miles] / 21 [MPG] = total gallons consumed [which I’ll call G]. G * price = total cost / (G * price – 2.99) = annual cost to Chrysler * 3 = total cost to Chrysler. Given my legendary inability to do anything beyond basic math I put this out there so that someone can and will correct me.)