First reports on holiday sales are grimmer than had been expected. You will see reports that say sales fell 8% in December through Christmas Eve and 5.5% in December. Ignore them as they include gasoline sales which skew the numbers

The right numbers to look at are a 2.5% drop in November and a 4% decline in December. That’s bad and below even the most pessimistic projections. Still, the year isn’t over. Gift cards have tended to push some buying into the week after Christmas as recipients use them up (using them up quickly might be a very wise thing to do this year) and retailers are going to go all out to clear out inventory via sales. So, in the end sales might not look as bad as they do right now.

That doesn’t mean profits for the retailers, however. I’ve said before that I’m a fan of anectodal or drive-by market information. I’ll explain why one of these days. But, last night at a family gathering I heard some disturbing news from a friend that has a lot of experience in the retail industry. He is on the supply end, that is he sells a product to the major retailers. The guy is pretty astute, has been pretty successful and possesses a good analytical mind. The information that he passed on was that some very big names are not going to be around after the end of the year. He also felt that most of the major regional malls in Phoenix-a good proxy for the national retail market-would probably see 25% of their merchants fail to survive the coming bloodbath. His reasoning was simply that this season has been an exercise in liquidation, not selling for profit.

I am no expert on the retail industry but the comments and reasoning behind it made a great deal of sense. Just as an aside, the company he happens to work for is not going to make it. Their factory in China is being closed down.

Keep an eagle eye out for bargains. The sales are going to be outrageous.

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