The Sort of Wall Street Journal Reporting That Makes Me Crazy

In the early days of this blog, I’d regularly compare the Wall Street Journal’s reporting of a news story with that of the Financial Times, because in the vast majority of cases, the Journal had either gotten it badly wrong or was putting a very positive spin on a less obviously cheery fact set.

That abated somewhat as the Journal got to be less clueless about the credit markets and the crisis got so bad that the Journal quit falling for sources putting lipstick on pigs.

But old habits die hard, and we see a reversion to form tonight.

The headline is a give-away: “Holiday Shopping Off to Strong Start.” And the supporting data?

The holiday shopping season got off to a better-than-expected start, as retailers reeled in cautious shoppers with massive discounts like “buy one get one free” sweaters at Gap Inc. stores, $200 iPod Touch music players from Inc., and 26-inch LCD TVs at Target Corp. sites for $299.

In a survey of 3,370 shoppers, the National Retail Federation estimated shoppers spent an average of $372.57 over the weekend, up 7.2% over last year’s $347.55.

Gee, that sounds really good, particular given the gloom and doom expectations. But what does the story say later?

A different survey, performed by ShopperTrak RCT Corp., found sales on Friday were up 3% over last year, to $10.6 billion. The gains marked a deceleration of growth compared with 2007, which posted 8% sales gains. ShopperTrak will release data for Saturday and Sunday on Monday.

Up 3% is still a good number, but the ShopperTrac survey appears to be based on real transaction data, not a survey. Surveys, particularly ones with random sampling (how is the Retail Federation survey done? Do they walk up to people in malls? You’d probably have lower participation by window shoppers or in-and-out buyers by mere virtue of the fact that they’d spend less time on premises). However, quick look at ShopperTrak’s website shows it promoting traffic count surveys, so I wonder how they came up with their figures. More disclosure about the methodologies would have been helpful.

But the Journal chose to lead with the more optimistic, and potentially less reliable survey (in fairness, in this case, so did the Financial Times, but with a tad less enthusiastic headline (“Black Friday bargains lift sales“). The New York Times gets a gold star for most nuanced headline: “Solid Start to Holiday Shopping, but Discounts Threaten Profits.”

But both stories stressed that sales were in heavily discounted items. From the Journal:

Although unprecedented discounts lured shoppers into stores, momentum ebbed Saturday, raising concerns that shoppers were merely exploiting the “door-buster” deals and then walking out of stores. Indeed, as many as 70% of consumers purchased only deeply-discounted merchandise Friday, according to Charleston, S.C.-based America’s Research Group, which polled 700 shoppers over the weekend.

“They didn’t stay if they didn’t get the deals,” says Britt Beemer, the firm’s founder.

In other word, profitless revenues on many of the items sold, and other inventory left behind.

Both the Journal and the FT stressed that crowds were thinner Saturday. And the FT gave another proviso:

Despite the attention paid to the weekend by stores, the post-Thanksgiving sales are not a reliable indicator of the industry’s performance for the whole season, because the highly competitive price cuts sometimes bring some spending forwards.

The New York Times was downbeat by comparison:

But while spending was up, there were troubling signs in the early numbers. The bargains that drove shoppers to stores were so stunning, analysts said that retailers — already suffering from double-digit sales declines the last two months — would probably see their profits erode even further.

Also, after shoppers flooded stores on Friday, foot traffic trailed off significantly on Saturday and Sunday.

I unexpectedly did my patriotic bit and the first time ever was at a mall on Black Friday (I am also just about never in a mall) buying a book light at full price. It turned out to be lousy, less bright than the lights on the airplane. And I deliberately bought the expensive one with the strongest light. No wonder I hate shopping.

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  1. shayre

    What if weekend sales were actually much higher because everyone made the effort to get all of their Christmas shopping done all at one time. The one time they assumed they would be able to get the best prices and the best selection.

    I wouldn’t be surprised if Christmas shopping comes to a grinding halt as we move through December.

  2. esb

    FORBES once called itself “The Capitalist Tool” and may still do so.

    I submit that the WSJ should begin calling itself “The Sell Side Shill,”

    unless BARRONS has already reserved it.

  3. bg

    I was out this weekend and was surprised by what Peggy Noonan at the WSJ has been calling the curiously normal environment during the Great Depression II. Malls parking lots were full, people were emptying their pockets. The only thing really different is the stores. Many looked undercapitalized, and more than a few were closing or discounting so feverishly to make it seem so.

    I am not a booster for the WSJ or the economy, but I agree with her observations.

  4. jeff65

    Yves, Although my wife laughs at me, I use my Petzl 4 LED headlamp for a booklight. It is much better made than any booklight I’ve seen.

  5. Yves Smith


    Mike Milken used to wear a miner’s headlamp so he could read on the bus in the early days of his career. Now I know why.

  6. aw70

    Your comment about the book-light somehow touches a familiar note with me. I have also grown to hate shopping, especially at malls, with a passion. But not because I am a curmudgeon, or a particularly ascetic individual who has long eschewed the lower spheres of being.

    Nope, it’s much simpler than that. I hate malls because the vast majority of things sold there could suck glass eyes through bent straws in terms of product quality.

    Point in case: yesterday, I had to go shopping to buy a new bonnet. The simple, black woolen kind you wear when it’s freezing, and you want to prevent your ears from falling off. I’d lost my old one – no vanity shopping there, just a simple, utilitarian purchase.

    So I toured the city, and for several hours tried to find a bonnet that was a) not made of synthetics, b) affordably priced, and c) not as ugly as sin.

    No such thing was to be had. In the end, I bought a 50%wool, 50% acrylic one at a street stall for a very low price. This was not what I really wanted, though.

    None of the expensive, brand-name shops had anything of the sort. All that was on offer were either 100% synthetic bonnets (the kind that makes your hair stand on end with static electricity just by looking at it), or ones that were ugly, embroidered with huge brand logos, and vastly overpriced. Excuse me, if I were to act as an advertising billboard for you, I do not want to pay *more* than what I would pay for a no-name product…

    I am certainly not the only person in such a situation: someone with money in their pockets, and who would be willing to spend it for quality merchandise. And who don’t give a rat’s rear end about brand names. As with many other products I’ve bought in the past, money was not the problem here. I’m the sort of person who willingly spends more for good merchandise, in the expectation that it will last longer, and is more pleasurable to use in the first place.

    So… why the *expletive deleted* does that wonderful free market we’re having not cater for my needs? Why do malls always seem to degenerate into dozens of indistinguishable shops, which all sell indistinguishable, crappy goods that no-one in their right minds would consciously buy?

  7. Viv

    Bg, the great depression didn’t happen overnight. I expect the real effects to start showing up next year to 2010. It’s a gradual worsening of things and there’s no way that any amount of spending is going to get us out of this. People need to start saving again, houses need to become affordable, a lot of deflation is welcome in health care and education costs!

  8. fresno dan

    Take it back!!!
    It didn’t meet your expectations. There is no reason to reward companies that make products that do not perform to your satisfaction.

  9. Anonymous

    I recently had to buy a new washing machine and was faced with the dilemma of whether to spend a little on one with a short guarantee (2 years) knowing full well it would probably fail not long after the guarantee expired or to buy one a double the price which had a 10 year guarantee. I took some credit at got the one with a 10 year guarantee, but it got me thinking about some anecdotal evidence from relatives who went through recessions. Typically they would by higher quality items with a view to them lasting longer, especially with clothing and footwear. I expect this to come as a big shock to some management teams as a consumer perceptions of what they want shift.

  10. Richard Smith

    Dead hand of Murdoch at the WSJ.

    “The Times” from the same stable over here is the same – utterly dumb on the credit crunch.

  11. miguel_swanstein

    Did you really do your patriotic bit?

    I’d bet a $100 Circuit City gift card that reading light was manufactured offshore.

  12. Terry

    This year’s holiday sales look to be well off from last year’s based on the Black Friday sales report of a 3% gain over last year.

    The key is that there are 5 fewer shopping days between Thanksgiving and Xmas this year. That means that sales have to be at least 15% higher every day in a YOY comparison to match last year’s sales levels.

    In short, Black Friday sales were 12% below last year’s when accounting for the fewer shopping days available.

  13. nemo

    A writer over at Slate reviewed book lights a couple of years ago. He found some serious flaw with most of them:

    Guiding Light
    Which book light outshines the others?
    Tom Bartlett
    Jan 17, 2007

    He liked a few of them, but honestly, none of them sound as good as the Petzl 4 LED headlamp from your local camping store.

  14. curious-er

    Terry said…

    In short, Black Friday sales were 12% below last year’s when accounting for the fewer shopping days available.

    This logic makes sense only if shopping is distributed evenly over the shopping days available. We know it isn’t, since Black Fridays draw the biggest crowds.

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