Dec 192007

Holiday '07 Going Out With A Whimper?

Last week, Mark Ballard analyzed Holiday 2006 vs. Holiday 2007 across our client base.

He looked at sales driven by paid search across our clients, restricting his view to clients we've been serving for over a year, to have valid same-site comps.

His was a careful analysis, looking at medians and trimmed means, and treating all clients equally, to ensure the results of our largest clients didn't dominate.

I'm comfortable with the method and the sample size, and would be so bold as to suggest his conclusions are reasonably representative of the overall B2C web online retailing experience this season.

Mark found that

  1. Comparing last year to this year, more holiday buying has shifted online.Our clients are seeing 10% to 70% increases in their web sales, total web as well as PPC-driven web, '07 vs. 06.Our clients' total business aren't seeing overall revenue growth like this -- clearly this is just web stealing share from stores, call centers, and catalogs.
  2. Earlier weeks of Holiday '07 were stronger (relative to last year) than more recent weeks. While online sales are still very strong, and are much stronger this year than last year, the relative amount of that strength has been fading. This is an ominous sign. These rates should be increasing, not decreasing, as we head into the final days of Holiday 2007.

The 2007 and 2006 retail calendars line up pretty well -- weekdays between Thanksgiving and Christmas, etc.

So, we repeated the prior analysis starting earlier, and disaggregating weeks down into days.

The results aren't encouraging.

q4 holiday 2007 vs. 2006   comp-site sales

This blue line in the graph shows the median lift in comp-site sales, this year's holiday vs. last year.

The red line is a best-fit linear trend.

The downward slope of the red line indicates the holiday lift, last year vs. this, is eroding.

The news media is full of stories about slowing holiday sales in retail stores.

While our typical client is enjoying strong year-over-year growth in their web businesses, I fear these gains aren't incremental, simply channel shift.

And, even online, I think we're seeing the economy starting to slow.

google trends: "recession"


3 Responses to "Holiday '07 Going Out With A Whimper?"
Rich says:
Could this simply be that as xmas approaches, people instead head to stores so that they ensure gifts in hand before the big day? How does this chart stack up against past years? (or am I completely missing the point?)
Hi, Rich. In '05 and '06 (maybe earlier years too, data not at hand at the moment), holiday web sales -- whole-site and PPC-driven, both -- grew in the final days approaching Christmas ("grew" using prior year as benchmark). You're right that there are many factors at play here, and experiences will vary retailer to retailer, but (sadly) I think this large sample argues for for a cooling holiday this year... Ever the optimist, I really hope I am proved wrong, with a last minute surge. -- Alan PS When you say "how do the data stack up against prior years", the graph above is the ratio of '07 vs. '06 by day, so it is stacking up this year at least against last...
Rich says:
Sorry, I understood that this was comparing vs. last year... What I meant was what you talked about early in your reponse, in that, what was the growth pattern (year-over-year) like leading up to the holidays. You wrote that it accelerated into the xmas holiday. That's what I was trying to ask, and thanks for answering. Any idea on what this may mean to the search engines? Have CPC growth rates also been slower than prior years by a big amount? I know there was a post about this a few weeks ago, curious to see what's happening heading into the holiday.

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