The problem with ruminating out loud about all the projections for revenue and profits in this year’s holiday season is that one will get asked to ruminate more. And that’s just what has been happening in the last two weeks based on a couple of recent Retail Paradox Weekly columns that I wrote. All of this reminds me of one of my father’s best bits of advice, “when you’re in a hole, put down the shovel. ” I think I’ll do that, especially after having been asked last week to comment on the effect of lower gas prices on holiday spending. But just for fun, I decided to look at the evidence before deciding not to put my foot to the shovel. Here’s what I found out.

First of all, Americans love to drive their cars. Don’t take my word for it – here are some numbers published by the U.S. Federal Highway Administration. Americans drive an average of 13,476 miles per year (males average 16,500 while females drive 10,042). That’s pretty much what most of us expect (I know that when getting a quotation for insuring my car, I’ve always used the number “12,000 ” as a general guideline).

The reason the number of miles we drive is interesting right now is because there are a lot of people saying that the holiday season will be a good one for retailers as a result of prices at the pump falling in the U.S. That brings up the obvious question: how much will the drop in gas prices put into the pockets of U.S. consumers for their holiday spending? I decided to figure it out….

Last year at this time the average price of a gallon of “regular ” gas (according to watchdog website gasbuddy.com) was about $3.25, while this year it’s about $2.85, delivering $0.40 per gallon back to consumers. But that is very recent history. According to same data source, the plunge in prices at the pump only started to really nosedive in the last 5-6 weeks. U.S. government statistics indicate that the year-to-date average for all grades of gas this year is about $ 3.54, compared to about $3.575 for 2013. That’s a 3-1/2 cents difference between the yearly averages.

Now let’s do the math. The average miles-per-gallon (as of 2013) for all cars, light trucks, minivans and SUVs purchased in the U.S is about 24.6 mpg. Recognizing the obvious fallacy that all cars on the road meet this standard (there are still al lot of older cars out there), let’s just say that the average is 20 mpg (that makes the math easier anyway). So if we all drive somewhere around 13,475 miles a year, in 2012 that cost each of us about $2409/year, but only $2385/year for 2014. That’s a net $24 back in the pocket of every consumer. That’s good for a gift (or maybe two) for the kids. Or if you’re feeling particularly festive, you can buy a A Christmas Story Nightlight Leg Lamp by NECA on Amazon for a little over $14, and still have enough for a couple of Eggnog Lattes at the nearest Starbucks.

Netting it out, is this yet another case of what Marvin Gaye sang in his 1968 hit song I Heard It Through The Grapevine, “people say believe half of what you see, and naught of what you hear “? On the one side, the Wall Street Journal reported on November 14^th that, “a steady decline in U.S. gas prices since the summer … has raised hopes for a pickup in spending during the holiday shopping season that could lift the retail sector and the economy at large “. And on November 18^th, Reuters highlighted comments from the CFO of small package shipper UPS, Kurt Kuehn, who said that, “The impact of low fuel prices right now is it puts more discretionary dollars in consumers’ pockets. We do think that it is certainly not bad timing that all of the Santa Clauses around the country will maybe have a few more dollars in discretionary spending for the holidays. “

On the other side, results from a Reuters/IPSOS poll released on November 20^th tell a different story. Reuters reported that “the survey of 1,707 adults, conducted Nov. 12 to Monday, found that almost 60 percent remain cautious about spending because of ‘economic uncertainty.’ “

The Business At Hand

My own sense is that people need to stop trying to read tea leaves and just stay focused on the business at hand. As I mentioned last week, the consensus opinion is that the industry overall (in the U.S.) should see a 4% “or thereabouts ” increase over last holiday season. The question for each retailer is, “how are we going to get our fair share of that lift? ” In an article published by Bloomberg on November 4^th, small businesses were offered 8 tips for a successful season. It was good pragmatic advice that feels just as appropriate for mega retailers as it does for the small guys, and so I’ll repeat it here (to see the full article, go to http://www.businessweek.com/articles/2014-11-03/holidays-eight-tips-to-boost-retail-sales) :

1. Spruce up you website
2. Stay true to your values
3. Spread the cheer
4. Extend your hours
5. Offer free shipping
6. Hire staff and focus on service
7. Arrange some special deals
8. Get organized.

I would only add one more:

9. Don’t panic.

And as for me, I’m putting down the shovel – I’m done for this year with holiday predictions. I promise.