Black Friday Sales: A Lesson in Sample Size

How seriously should you take one weekend's worth of retail sales data?

by Adam Warner

Published on Dec 2, 2014 at 8:18 AM
Updated on Jun 24, 2020 at 10:16 AM

Black Friday sales are down! The economy must be worse than we think! Sell everything!

Well, that's kind of the impression I got listening to the insta-reaction off the insta-numbers from Black Friday. And anecdotally? The line outside Best Buy looked pretty long about eight hours before they opened. Then again, I can't compare that to anything. I was picking up our Thanksgiving turkey at Whole Foods, which is next to a Best Buy.

Perhaps the news isn't so gloomy, though. This, from Barry Ritholtz.

"Please repeat the following, once again with gusto: We don't know what Black Friday sales were, not yet. And we certainly don't know what the impact of the actual number will be on final holiday retail data.

How did we get these numbers, which almost by definition are wrong? It is a combination of a retail trade group that cares little for accurate economic data, a terrible survey methodology and a naive and lazy news media, which seems to believe its role is to mindlessly repeat whatever nonsense is peddled by the aforementioned trade group."

Well, OK then. I know little of measuring the sales from one day of data, much less putting them into any sort of context. Then again, I can say the same thing about the reportage.

There is the obvious point that shopping habits change over time. Stores open earlier now and online sales as a share of total sales go up an unknown amount each year. People are conditioned to seek out deals everywhere, so sale prices themselves persist for basically the whole season. I could go on and on.

There is also a point that I never get. If you have "X" number of people to get gifts for and you have to spend an average of about "Y" dollars on everyone, how dependent on the economy are we anyways? I realize if times are flusher, you may lean towards spending more per person. But, we can probably infer that from any sort of median economy and/or confidence number. Whether someone buys something in a store last Friday or online whenever, it's all ultimately going to morph into a somewhat predictable number when the whole holiday season ends.

It's more of a sample size issue than anything else. One day and one weekend of sketchy estimates do not a season make.

The market had a modestly down day, though it feels like a crash given the action over the last six weeks or so. Was it because of Black Friday numbers? Is it declining oil? A combo thereof? That's the working Cause du Jour. I'm no economist, but it feels like lower pump prices mean more money for iPads and "Call of Duty" and "Frozen" figurines. That is, of course, if we're keeping with the theory that holiday sales are malleable. Who knows, though -- and it ultimately doesn't matter much.

Disclaimer: Mr. Warner's opinions expressed above do not necessarily represent the views of Schaeffer's Investment Research.


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