Seasonal factors in retailing ’Tis the season … but not as much as it used to be

Is it possible we overestimate the impact of the holiday sales season?

In November, economic reporters’ thoughts turn to “Black Friday” and the (apparently) all-important season for retail sales. It’s called “Black Friday,” we are told, because that’s the day when retailers finally begin to show a profit for the year—prior to that day, they typically would have recorded losses in red ink. (Well, these days, red pixels on computer screens.)

But it’s possible we overestimate the impact of the holiday sales season.


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For some types of retail stores, “the most wonderful time of the year” is the slow period. Of course, any retailer with heart in the game will push the season for all the sales it’s worth. But if you are selling cars, or building and garden supplies, it’s the summer—not December—that will put you in the black. Even retailers who traditionally feel that holiday spirit are finding sales slipping into January, and even out of the season altogether.

What’s in retail sales

The most comprehensive data on retail sales come from the Census Bureau. Census publishes monthly retail sales, in total and by type of store.1 Table 1 shows the main individual types of stores and their shares of retail and food service sales.2 Almost 20 percent of retail sales are accounted for by motor vehicle and parts dealers. General merchandise stores, food and beverage stores, and food services and drinking places are the other large categories.

Table 1: Detailed components of retail sales

NAICS code Share of total
441 Motor vehicle and parts dealers 19%
442-3 Furniture, home furnishings, electronics, and appliance stores 4%
444 Building materials and garden equipment and supplies dealers 6%
445 Food and beverage stores 13%
446 Health and personal care stores 6%
447 Gasoline stations 11%
448 Clothing and clothing access stores 5%
451 Sporting goods, hobby, book, and music stores 2%
452 General merchandise stores 13%
453 Miscellaneous store retailers 2%
454 Nonstore retailers 9%
722 Food services and drinking places 11%

December matters … for some

Figure 1 shows that December is, indeed, a period of relatively high retail sales. The 2013 seasonal factor3 for December is 1.14, which means that seasonally adjusted December sales reflect a 14 percent downward adjustment to the raw (unadjusted) number. This is the largest seasonal factor for any month. January and February have the lowest seasonal factors, with upward adjustments of 10 percent or more. This is likely related to the relatively poor weather in much of the United States (and maybe also consumers’ need to pay the bills for the December splurge).

Sept14 Numbers Fig1

The aggregate, however, hides considerable variation in different types of stores. Figure 2 shows seasonal factors for December 2013 for the major types of stores. Sporting goods, hobby, book, and music stores experience the biggest seasonal impact, followed by clothing stores, electronics and appliance stores, and nonstore retailers. Three types of stores experience lower-than-normal sales in December: motor vehicle and parts dealers, gasoline stations, and building supply and garden stores. Food and beverage stores, food service and drinking places, and health care stores show little, if any, seasonal impact, with December accounting for approximately one-twelfth of the year’s sales—as we might expect if there were no seasonal influence on sales.

Sept14 Numbers Fig2

Less December cheer, more January sales

At Deloitte, we define holiday-sensitive sales as retail sales and food services less automobile dealers and parts, and gasoline stations. (See this year’s Deloitte holiday sales forecast here.) While this includes some stores—like garden centers—that do not experience a seasonal peak around the holiday season, these types of stores still place an emphasis on gifts in the winter. Gardeners happily finding new tools or equipment under the tree can testify to this. For auto dealers, the holidays just don’t have that retail high, as it’s pretty rare for Santa to bring a car.

Deloitte defines the holiday season as November through January. Figure 3 shows the seasonal factor for this holiday quarter for our measure of holiday-sensitive sales. The seasonal factor has trended down over time by a significant amount—from about 1.08 in 1993 to just over 1.05 in 2009. That’s more than a one-third decline in the usual increase in sales. It’s a pretty significant softening of the impact of the holiday season on retailers.

Sept14 Numbers Fig3

Figure 4 shows that the overall decline isn’t the only change that retailers have been experiencing. The figure shows December and January monthly seasonals for the holiday-sensitive sales. The December seasonal has fallen by one-third, from over 1.3 in the early 1990s to about 1.2 in the past two years. Some of this has been offset by an increase in January sales. While January generally sees relatively low sales, the seasonal has moved up from a low of 0.87 in 1995 to 0.92 in 2013.

So don’t be fooled by the hype. The holiday season’s hold on US retailers is getting weaker. And while we hear that December 24 is the busiest shopping day of the year, shoppers are also holding off until January to make their purchases. Remember that small consolation when you are circling the mall looking for a parking place this holiday season.