Black Friday reports misleading, analysts looking at wrong data

Many of the Black Friday retail reports are flawed in their data in that the sample survey is probably not representative, according to Kurt Jetta, CEO and founder of TABS Group Analytics. Specifically, he said the National Retail Federation's recent Thanksgiving report that sales dropped 11 percent was "seriously flawed," therefore leading reporters and consultants to draw incorrect conclusions.

Similarly, RetailNext reported U.S. store sales fell 11 percent and traffic was down 11.4 percent in November.

Jetta said that there is no data to corroborate these estimates. First Data Corp. measured sales growth of 5 percent and a majority of retailers have reported positive comps for November. If this NRF data had been true, then Jetta believes the comps would have been negative or flat.

So what data should retailers be looking at to gauge how well holiday promotions did over Black Friday and Cyber Monday? Jetta said retailers need to determine the incremental factor—or what percentage of the sales were incremental due to promotions. These sales can be determined by looking at the difference in sales numbers for items that were promoted this year but not last year.

"Incremental factor (IF) is important to understand because it can help predict the remainder of the season given what you know about the promotional calendar. If the "IF" is high, then it will be difficult for retailers to pull back on promotions as the season progresses," said Jetta.

Jetta notes that there was a shift in spending habits this Black Friday. Consumers spent less on consumables and apparel and more on electronics and durables. The strongest sales were in electronic retailers—Best Buy, Amazon, Costco—and the weakest were in pure apparel and accessories—Abercrombie & Fitch.

Overall, Jetta noted that it was a good weekend for retailers. According to TrackIf, there were deeper promotions this year but sales were up 5 percent, confirming that more deals can mean more sales. According to the TABS Group, 92 percent of consumers utilize at least one deal tactic regularly and 42 percent utilize at least five.

"Promotional buying is a fundamental human need, and given that, promotions are good, not bad," said Jetta. "The key is not to find a way to deal less, but to deal profitably. This entails accurate forecasts of promotional increases and inventory requirements, as well as appropriate sharing of discount subsidies between retailers and manufacturers."

For more:
-See Kurt Jetta's blog

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