Over the Black Friday weekend, massive human herds were out in force but retailers pacified them with electric fences, cattle prods and lots of large blue salt licks scattered about. It seems that even though foot traffic increased; the hordes were spending less on a per capita basis than even last year’s poor numbers. Is it possible that these creatures spend more when they have been whipped into a full frothing frenzy? Needless to say, I wasn’t to be found anywhere near any retail outlet for the entirety of the greedfest.
Weekend sales were balanced by a surge in both sales and traffic on Cyber Monday. Forrester Research projects that holiday season online shopping may grow from 6% to 10% of all holiday sales. Even with this growth, online sales are still too small to push the overall sales needle by much and a lot of the increase may simply be the result of cannibalization of bricks and mortar sales. This may portend a long term shift in consumer patterns more than it actually affects sales volumes today. Employers may be concerned that most of this online shopping takes place during office hours which echoes trends seen at Toyjobs where our analytics show that our job board is accessed mainly during weekdays and drops off significantly during evenings and weekends.
It’s important to remember that Thanksgiving is a notoriously poor predictor of sales for the holiday season as a whole. It is typically eclipsed by the last weekend before Christmas. This year there is concern that light retail inventories will mean that there won’t be many choice goods left on the shelves by that time. The most widely cited forecast for this year’s season calls for a 1% decline in holiday sales from last year’s already weak showing. Furthermore, a 2005 study shows that retail forecasters have a tendency to overestimate sales. All this leaves me with little solid footing in guessing (and that’s really what it is) where retail sales will end up. I think it’s pretty clear that it won’t be “good”. It just remains to be seen how “bad” they will turn out although I don’t think the end result will be disastrous. We’ll just have to wait and see.
Last Friday’s jobs data seem to indicate that we may be beginning to turn the corner on the employment front. Jobs lost in November were down to 11,000 (a drop in the bucket considering the size of the population) and the unemployment rate drifted lower from 10.2% to 10% (still incredibly bad). Significantly, U6 (a broader unemployment statistic which includes: the underemployed, part timers, “consultants” and the totally disheartened) has gone from 16.3% all the way down to 12.2%. While those numbers are an improvement, one month does not make a trend and economic indicators don’t usually travel in a straight line.
When you consider everyone affected by unemployment (spouses, kids, dependent elderly parents), the “percentage of the affected” is huge. Throw in that one in eight Americans is currently benefiting from some sort of food stamp program and it becomes quite clear that we are a very long way from being out of the woods.
Anecdotally, Toyjobs has found that things are continuing to improve. In fact, I would say that the improvement curve has steepened in just the last few weeks. A year ago, when we would call longstanding clients about possible job opportunities – they would just laugh. Currently there is a lot more chatter. This hasn’t shown up on our jobs board as of yet, but I predict that it will over the next six weeks. We have a lot of outstanding unsigned search contracts out there (these are contracts sent to clients at their request but not yet signed and the search not yet started). Also we are having a lot of discussions with companies getting ready to start searches but waiting to see how holiday sales and the January Hong Kong Toy and Games Fair pan out. What is less spoken of, and is probably the Joker in the deck, is how banks will deal with loans and lines of credit. Things seem to be slowly loosening up but I still have a hard time believing that seasonal fashion businesses are on the top of anybody’s lending list. I’m not yet ready to say that I’m cautiously optimistic. I am more comfortable with the phrase – optimistically cautious.
Happy (?) Holidays,