I was telling someone yesterday that it seems we hear the same thing, every year around this time: a mantra repeated around the annual Black Friday rush. It goes something like…
This year will be awful for retail stores! No one is going to shop, no one is going to buy. The stores will be empty and everyone is going broke!
And yet, every year, we are treated to national images of swarms of shoppers acting like little consumerist fiends, circling the nearest sale like piranhas, credit-card blood-lust in their eyes.
Yesterday morning, the streets were empty.
I went to the car wash, did grocery shopping, used the ATM. It was like a ghost town. Everyone was shopping. No one, as far as I could see, was leading a normal life apart from the maddening mall crowds. Yet, the dissonant drumbeat over the radio and television and internet: no one is shopping, you can shoot a cannon in the nearest mall…
And this interesting article in The Atlantic that addresses the seeming discrepancy between empirical experience and apocryphal tales woven annually as a preface to the Black Friday kick-off to the annual Christmas shopping season.
In the article, The Atlantic lays much of the annual shopkeeper’s “the sky is falling” laments to the National Retail Federation’s (NRF) dubious gathering and interpretation of data which seems self-designed to tragically minimize the prospects of this Black Friday’s shopping output.
But there’s another, much less visible, component of this annual tradition: Every year, a man named Barry Ritholtz, an asset manager and contributor to The Washington Post and Bloomberg View, complains about the quality of the NRF’s data and the media’s mindless repetition of it. In last year’s installment of his ongoing rant, he wrote, “I have become a curmudgeon on this.”
Ritholtz is mad about two things. First, he takes issue with the NRF’s methodology. As he explained to the podcast On the Media last year:
What the survey that the National Retail Federation does every year is they ask a group of shoppers, “Hey, what did you spend on holiday shopping last year?” and they get some number, and then say, “Well, what are you going to spend on this year?” And they get a second number and then the difference between those two numbers is how they come up with [it].
In other words, the NRF data that major newspapers rely on is self-reported, and self-reported data on spending is notoriously weak. It’s just not very useful to know what shoppers say they expect their future spending to be. They are going to be wrong. (ShopperTrak, an analytics firm whose data was used by the Times this year to pronounce a “slip” in sales, uses a methodology that Ritholtz finds similarly suspicious.)
But the real meat and potatoes “tin foil” part of this is something I’ve always suspected about the annual bleak holiday shopping outlook propounded in the media. Rather than simple methodical ignorance, the roots of such public pessimism are designed with ulterior motives on the part of sellers and the retail industry.
The second thing that irritates Ritholtz is how this (already questionable) data is used to make claims about consumer sentiment at large. In 2005, the year Ritholtz first aired his grievances (to a reporter at The Wall Street Journal), the NRF estimated that sales the weekend after Thanksgiving were up 22 percent, but holiday spending that season ended up increasing only 1 percent over the previous year. The most egregious instance was in 2009, when the NRF’s 43 percent estimated decrease was rendered ridiculous by the 3 percent increase revealed after an actual tally.
The retail industry engages in smoke and mirrors each Black Friday’s antecedent tales of doom and gloom. To what end, you may ask.
Last year on On the Media, one host, Bob Garfield, posed an important question to Ritholtz. “Why is it in the NRF’s interest to be trading these silly numbers year after year, especially when the numbers point downwards?” he asked. To which Ritholtz replied: “It keeps the shopping season front and center.”
Doesn’t hurt that the public is largely composed of materialistic monkeys easily prone to the power of suggestion.