Wednesday, December 02, 2009

Black Friday Retail Sales

If there is one industry I am intimately familiar with, it is retail. Over my career I have worked with the management teams of a substantial number of top retailers in the world. Many of my friends and associates work in senior positions within the retail and the consumer products space or as consultants to the industry. As I watch the media reports over the past few days, there has been a lot of constructive remarks about Black Friday retail sales. And that cyber Monday sales were excellent.

Neither could be further from the truth. Remember last November the world appeared as though it was going to end and spending was awful. To date, it appears the spending data confirms spending was down ten percent over last November but total shoppers were up ten percent. In other words, more people were out mingling yet spending was down. Statistically this data is skewed as we have come to rely on a disproportionate spend from the top few percentage points of Americans. For the vast majority of retailers, margins are likely to be very poor as nearly every retailer is in a race to the bottom of the pricing barrel to keep its customer base.

There is no economic recovery. And there will be none without a new economic model. There is only a temporary stabilization well below trend as the world's politicians and central bankers spend themselves to death.

posted by TimingLogic at 12:38 PM