How do they analyze holiday sales?

A woman carries a package through the Galleria in Houston, Texas, on Nov. 24, 2006.

TEXT OF INTERVIEW

KAI RYSSDAL: I was at a business lunch on Thursday and in the course of things the group got to talking about Black Friday. Which is actually, this Friday. The day the holiday shopping season gets going in earnest. Anyway, there was a guy at lunch who said he actually enjoys hitting the malls at 4:00 in the morning with a couple of hundred other people. I don't see it myself, but the retail industry has come to count on the day after Thanksgiving as bellwether for how holiday sales are going to go. This year most analyst estimates are for something like a 4 percent increase over last year. But how do they know? Marshall Cohen's the chief analyst at the market research firm NPD Group. Good to have you with us.

MARSHALL COHEN: Pleasure to be here.

RYSSDAL: How do you guys know, what you know, about what we're gonna do on Friday? Do you all use the same methodology?

COHEN: Actually, no. For every different industry that's being tracked, there are different types of methods to do it. For example, some companies look at holiday sales as just being November and December, I personally look at November, December, and include January in holiday sales because January's just as much a part of holiday today as it's ever been before.

RYSSDAL: As critical as holiday shopping is though to the economy, I mean you read all the statistics, wouldn't we all be better served if you guys could agree on one way to figure out what we're gonna do?

COHEN: The key here is recognizing that not everybody looks at the holiday business with the same perspective, and the end results are different as well. For example, the retail industry is looking to have a spokesperson that can create good momentum. So there's a little bit of bias based in the answers. When you look at the financial institutions and their view, in some cases they're not only looking for sales volume, they're looking for profitability as well. Depending upon what your end result is, is the method that you're going to use to determine what the holiday forecast will be.

RYSSDAL: So do you sort of skew the data a little bit, depending on what you want to find out?

COHEN: I wouldn't say that anybody skews the data, but you can certainly look at numbers and create different views.

RYSSDAL: So actually it's more than just sticking your finger in the wind and saying "Uh . . . 4 percent this year."

COHEN: No, there is a science to it. Everybody has a methodology that they use. Some use different standards, and that's the key. It's not that it's not scientific, it's just that there isn't an industry-wide formula that's being used from institution to institution.

RYSSDAL: When one of your competitors comes out with their analysis, do you read it and say "No way. They left out X factor or Y factor, and that can't possibly be right."

COHEN: Those are the first words that always come out of my mouth.

RYSSDAL: Marshall Cohen at the NPD Group. Mr. Cohen, thanks a lot for your time.

COHEN: My pleasure.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.

Comments

I agree to American Public Media's Terms and Conditions.
With Generous Support From...