Black Friday Bear: Are Holiday Retail Forecasts Way Too High?

Barring injuries suffered in doorbuster stampedes, the holiday shopping blitz that started this week is shaping up to be a good one for retailers—at least, according to forecasters.

Pick almost any retail pundit, and you will find a bull. Deloitte expects retail sales to increase about 4.5 percent this holiday season. The National Retail Foundation pegs the bump at 3.9 percent. Analysts at the International Council of Shopping Centers expect a 3.4 percent increase (pdf).

But the research team at Barclays had a different take this week. In recent years, they found, holiday sales activity increasingly reflects the back-to-school buying frenzy. The two periods are about 85 percent correlated, making school shopping a great barometer for gift shopping. Unfortunately for retailers, consumers proved frustratingly frugal in late August and September. Total back-to-school sales actually declined slightly this year.

Here’s a look at shopping activity in both the stuffing-backpacks and stocking-stuffer periods for the past 15 years:

The lump of coal can be found in that sad little dongle at the far right, which represents this year’s back-to-school shopping slump. Granted, the economy in August and September was a bit more turbulent than in years past: July offered some disappointing jobs data, the government shutdown was looming, and the Federal Reserve was weighing a plan to taper its bond-buying program.

Still, shoppers may be wondering how much has changed in the past three months—and retailers might have more reason to worry than forecasts suggest.

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