This weekend brought us many stories of a booming “Black Friday “and suggestions that surprisingly strong sales over the weekend may mean a great holiday season for retailers. Today’s “Cyber Monday” will very likely produce a solid double-digit gain over last year, further supporting the narrative that the consumer is back.
I hope this is true. I really do. But I’m skeptical.
First, as I pointed out in my last post, historically there is no correlation between retailers’ performance in late November and their performance for the whole holiday season.
Second, in challenging economic times–which, last time I checked we are still in–many consumers become more deal conscious. This “surgical shopping” behavior causes them to cluster their spending only when they perceive the best deals are available. When the great deals stop, they pull their spending way back. If retail spending over the next week or so remains strong, that means something. If spending moderates, as I expect it will, we are just witnessing shifts in spending.
Third, even if the industry manages to generate sales above the expected ~ 3% growth overall and a ~ 15% rise in e-commerce, the question will still be whether this is profitless prosperity. Done well, “door busters” and other aggressive promotions can be important drivers of traffic that lead to selling higher margin items. Or, without a winning value proposition and a compelling customer strategy, they can be a recipe for destroying profit margins.
Bottom line, I believe we are witnessing pre-mature celebration. Only a longer view will tell us whether the customer is really back and whether a meaningful improvement in profits will be realized.