Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Saturday, November 29, 2014

The macro and micro economies and the impact of holiday retail sales

Neil Irwin writes in the New York Times ("Holiday sales don't really make or break the economy") that on a percentage basis, the total amount of retail sales in November and December is only slightly larger than the typical month, including that the National Retail Federation mis-states the impact of holiday sales by including purchases that would normally be made regardless of the holiday season.."

Although note he made a similar argument when he worked for the Washington Post.  See "Black Friday is a bunch of meaningless hype, in one chart."  Although the sales on Black Friday are a different issue than the total sales during the holiday period.

While he's right, especially at the macro level, I think he misses two points.

(1) The nature of the sales varies by business segment and probably more sales are made by independent retailers than during other times of year.

(2) The net revenues for independent retailers from holiday sales are significant, and generate most of their profits.  From "Holiday spending can lift businesses, entire economy" (Atlanta Journal-Constitution):
Jennie Rivlin Roberts hopes and expects to take in 40 percent of her yearly revenue during the holiday season at her store, ModernTribe. ... For many businesses, the tide of Christmas spending can provide a lift into profitability for the entire year.

Such is the strength of the season’s economics that it can carry even a retailer that lacks any Christmas component at all: ModernTribe sells Jewish-related items. “Even though Hanukkah is not supposed to be such a huge holiday, people get swept up in the buying for friends and family,” Roberts said.
Partly I started thinking about this more expansively because of my remembering that the majority of alcohol sales occur between Thanksgiving and New Year's (a point made by the director of the Center for Science in the Public Interest, back when I worked there).

According to an infographic on holiday sales, about 60% of retailers say their busiest seasons are either the fall or winter, and 59% say that they generate 1/4 to 1/2 their profits during their busiest season.

So holiday sales are more important to businesses on a micro-economic scale even if the macro-economic effect is less pronounced.

I do think that the various days like Black Friday or even Small Business Saturday are over hyped, which encourages us to look at nature of the retail sales function in a more detailed fashion.

Labels: ,


At 10:12 AM, Anonymous charlie said...

Black Friday (Cyber Monday?) is certainly very hyped up.

Holiday spending is not.

My personal view is holiday spending will become less critical as retailers better understand their consumers and can use various lures to bring them into the store at different times of year.

As opposed to 20 years ago where it was pretty rational to wait until the holiday sales.

Small retailers --- and area of you concern -- will not have access to that level of targeting tools. So for them holiday sales are still important. It is a signaling device.


Post a Comment

<< Home