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Q. I have a retail store and sales are down. It is like a ghost town in here. No one is buying anything off of my website either. What should I be focused on to get more sales right now?
Cater to ghosts?
The following is a national chart updated with March's retail sales and CPI data. It excludes food and beverage stores, food service and drinking places, and gasoline station sales in order to strip out the ever popular "food and energy" that is all the rage these days. The trend line is a 4th order polynomial.
Behold the miracle of monetary printing presses to prop up the economy. Once you adjust for the inflation, it is almost like printing more money doesn't really do much. Yeah, almost exactly like that. Go figure.
See Also:
Trend Line Disclaimer
Source Data:
St. Louis Fed: Consumer Price Index For All Urban Consumers: All Items
St. Louis Fed: Population: Mid-Month
U.S. Census Bureau: Monthly Retail Sales
12 comments:
These are the stores I love to shop. No pesky other customers to interfere. Unfortunately they all seem to go out of business after I start shopping there.
Shopping might be too strong a term. I usually just look for the clearance shelf. As I tell my wife, if it ain't on clearance, I don't need it. (She does all the food shopping.) And, as I tell my daughter, 30% off ain't clearance, that's just a sale.
Usually I'm looking for items the store probably shouldn't have in the first place, i.e., binoculars from Staples, home appliances from Home Depot (after Mother's Day), and anything except drugs from a pharmacy. Yeah, I know these items might incrementally increase sales, but the fact I'm buying them on clearance should tell them something.
Man, i didn't know you could get a 4th order smoothed polynomial to bend that hard. ;-)
Filled up at Costco for $3.68 yesterday. 4 deep at the pumps, plenty of parking for the store.
Fry's Electronics is great. No lines, no crowds. They've recently dropped their doorbuster DVD specials to $3.99. They used to be $6.99 and recently $4.99/$5.99.
The 99¢ Store was crowded with people buying food. Ewwww. Bad sign.
The signs are there for a retail implosion that will dwarf the housing bubble. The US is so overretailed it is scary.
Stag,
Import prices were up 14.8% in March (the biggest increase ever since the series began in 1982).
March PPI - up 6.9% yoy. A slight improvement from January when the PPI was 7.4% yoy, the highest since 1981. This is a veritable bright spot - woohoo!
March CPI was also slightly lower at 4.0% yoy. Another bright spot! Incidentally, I no longer follow the core rate as I got tired of going hungry, shivering and reading by candle light.
March consumer confidence came in at 63.2 - the lowest reading since 1982. If they had included me in the survey I am quite certain the number would have been even lower.
Quite the epic battle between inflation & deflation. It's clear that the Fed is terrified of deflation. Short of a growth miracle (aka a new bubble not including commodities) maybe stagflation IS the best option.
Pain City.
David,
Yeah, I know these items might incrementally increase sales, but the fact I'm buying them on clearance should tell them something.
Bought 6 nice (large tall size) waffle weave shirts (Henleys) at the Eddie Bauer Outlet store today. It set me back under $70. I was using a $60 rewards card they sent me in the mail for previous (hoarding) purchases. The salesperson knew my recent purchase history and said I must be just about done buying. I agreed. I'm done. Might think about buying more clothes in 30 years though! Seriously. (The same goes for sheets. I'm done there too.)
Deflation meets inflation. I'm thinking those manufacturing the apparel must really be hurting if they are using the proceeds to buy rice.
Rob Dawg,
Man, i didn't know you could get a 4th order smoothed polynomial to bend that hard. ;-)
VERY funny! You lit up my day.
Too many retailers. Too many restaurants. Too many banks. That's seems to be the story and I'm sticking to it. I was at McDonalds today. All I wanted was a simple hamburger. It was 99 cents. The cheeseburger was also 99 cents so the frugal person in me wanted that instead. Who wouldn't want free cheese? I couldn't stop there though. The double cheeseburger was $1. I opted to pay the extra penny for the extra patty. Talk about WEIRD pricing. Clearly something is horribly wrong in pricing land. The dollar menu never looked so good (now that the dollar is in the toilet).
MAB,
Quite the epic battle between inflation & deflation.
1970s meets Great Depression! That's also my story and I'm sticking to it.
Pain City.
We should be so lucky to localize the pain like that. The following was in my inbox today.
Fifty Indian rupees. That's about a dollar and 28 cents at current exchange rates — not enough to buy a cup of coffee most places.
But in northeast India's Darjeeling District, 50 rupees is a day's pay for hard-working tea pickers. Four hundred miles away, another half-million earn a similar wage plucking tea leaves in Assam's humid lowlands.
Let the grand global rebalancing plan continue. Sigh.
In other news, Boone Pickens no longer thinks oil is headed down to $85 and has turned long on it yet again at $115. He seems to have fallen for the oldest trick in the book. Short-term deflation is on the way! It seems to be a page from my book, lol, not that I've bet even a single dime on that outcome. I am almost entirely in TIPS after all. Stagflation continues to be my "long-term" thinking. That being said, any guesses on how much money the long-term deflationists have made in the last 50 years? I'm thinking not a lot.
I meant to say that the shirts cost me less than $10 today thanks to the rewards card. They were 50% off (basically in the clearance bin of a discount outlet store).
One last thought!
It is nice to see all of the comments left for me use an ample amount of sarcasm. I eat that stuff up you know.
Here's some bonus sarcasm related to eating stuff up.
The price of my favorite frozen burritos just went up. This should enhance the revenue (if not the profits thanks to rising input costs) for the company that makes them! That means that as long as I'm willing to pay the higher prices then the burritos will continue to be offered! Woohoo!
Stag,
http://en.wikipedia.org/wiki/Hedonic_regression
I'm seriously serious about launching a new financial product. I'm sure it will lift the economy out of the mortgage/credit mess. If structured properly, this financial product could even provide a limitless source for consumer borrowing.
Here's my new, new thing. I don't really utilize all the hedonics the government accrues to me in any given year. Take my VCR remote for example. It has about 50 buttons, but I only use four of them. Same with the safety features on my car. I mean, unless you're in an accident, those features are dead money. I'm certain I'm not alone on this.
I figure there is literally hundreds of billions of dollars of unused quality and value imputations that can be pooled, packaged, rated AAA, secuitized and sold. The scale is huge. How many angels can dance on the head of a pin? Who cares! I want to know how many buttons can fit on a remote baby.
With this new financial product, we can save all those wall street jobs too. This product is perfectly suited to be an ABS, CDO or CDO^^2. HED, hedonic equity withdrawal! As for the valuations -the gov't does the calcs for us. We don't even need to pay a rating agency. Absolutely no conflict of interest.
It's a win-win, core competancy, catagory killer. A master key to unlocking unused savings and wealth.
MAB,
I tend to take the middle ground when it comes to hedonics.
Some commentators, including Austrian economists, have criticized the US government's use of hedonic regression in computing its CPI, fearing it can be used to mask the "true" inflation rate and thus lower the interest it must pay on Treasury Inflation-Protected Securities (TIPS) and Social Security cost of living adjustments[2]
However, the same use of hedonic models when analyzing consumer prices in other countries has shown that non-hedonic methods may misstate inflation over time by failing to take quality changes into account[3].
I tend to believe both are true to some extent but neither concerns me all that much (nor does it apparently concern Warren Buffett all that much since he thought TIPS were a decent investment a few years ago).
It drives me somewhat nuts when I see people claim that true inflation is running closer to 12% and the reason we aren't seeing it is simply because the government cooks the CPI books. I was at Walmart yesterday. There was a Hamburger Helper bundle of two boxes for $2. How is that still possible? 20 years ago $1 a box was a great deal. It still is apparently, even with global food prices soaring. Go figure.
My personal inflation rate (based solely on my spending habits) is not running anywhere near 12%, at least not yet.
Even transportation costs aren't THAT bad, at least for me.
At $4 gasoline and 25 miles to the gallon, that's $16,000 in fuel to travel 100,000 miles. Unfortunately, the poor clearly feel that expense a LOT more than the well off. Further, the well off are more than making it up on the price of the vehicles remaining tame. The cost to buy my Camry now is virtually the same as it was back in 1996 (when I originally bought it). THAT expense (spending money to buy the car) dwarfs the expense of the fuel I've since put in it.
I am swayed when I hear an inflationist offer all the reasons why inflation/hyperinflation is a sure bet.
Unfortunately, I am also swayed when I hear a deflationist offer all the reasons why falling prices are a sure bet.
There seems to be very few who believe that both camps are partially right. There's part of me that looks at the trade deficit and is terrified of inflation. There's another part of me somewhat convinced that I can't protect my nest egg investing in even more stuff though. This country already has SO much stuff. It is virtually overflowing in self-storage units.
Great Depression minus the great deflation is my current thinking. Maybe inflation remains somewhat tame. Who knows! I can say that seeing Monex commercials talking up the value of silver reminds me a bit of 1982. I remember selling three silver dollars (high school graduation gift) for $18 each in a hotel room based on an ad in the newspaper. 15 years later I could have bought them back much, much cheaper. Silver was clearly in a bubble.
That being said, Soros thinks the commodity "bubble" is still in the growth phase.
Soros Says Commodity `Bubble' Still in `Growth Phase' (Update3)
http://www.bloomberg.com/apps/news?pid=20601087&sid=aUN8_k_wjFOM&refer=home
In 2004, I told myself I'd buy gold and silver and sell them once they started turning parabolic. Once I sold, I was done. That's what would have worked in the 1970s. I also knew I'd be tempted to buy them back just like I would have been tempted in the late 1970s when panic set in. I am currently tempted. I'm not going to do it though. I'm done (but continue to "hoard" things that have not gone up in price much, such as clothing and toilet paper). If we hyperinflate, I'll regret my decision. If we don't hyperinflate though, this commodity bubble will most likely pop at some point though, just like most bubbles.
This is a scary time for investors. No doubt about it. I don't think it is going to get any easier from here either. I believe the era of effortlessly making money is not only over, but has been replaced by an era of effortlessly losing money.
Pick your favorite effortlessly losing money poison:
1. 3 Month Treasury bills earning 1.35% interest before taxes?
2. 5 Year TIPS earning 0.52% after reported inflation but before taxes?
3. Hoarding items that have already quadrupled in price should hyperinflation not appear?
4. Investing in a flat stock market during a period of stalling growth and rising unemployment?
5. Watching the price of your home slowly decline as the property bubble fizzles?
That 5th one is a bear. It takes too much "effort" to sell, rent, then buy it back. Further, the effort is somewhat expensive and counterproductive due to the costs of selling and buying real estate.
Hmmm. Counterproductivity? Sounds like a miracle in the making (if the game Rockband is any indicator, lol).
Stag,
http://www.youtube.com/watch?v=akVL7QY0S8A
Elizabeth Warren from Harvard does a good job of explaining why middle class families are so financially strained. It's not just declining incomes, but also rising costs not properly represented in the CPI.
There was a Hamburger Helper bundle of two boxes for $2. How is that still possible?
From the movie Vacation (quoted from memory):
I don't know why they call it Hamburger Helper, it does just fine all by itself - Randy Quaid
Is that real tomato ketchup Clyde? Nuthin but the best. - Chevy Chase & Randy Quaid
Perhaps the above scene was the original impetus for the substitution & hedonic adjustments to the CPI.
More later.
Yes, good one Rob Dawg. Had me laughing out loud.
About the only thing I'd add is the original Vacation has to be the non-stop beginning-to-end funniest Chevy Chase movie there is. It never slows down, the silly just builds and builds.
MAB & AllanF,
Clark Griswald: So, this is the old homestead, eh?
Cousin Eddie: Yeah. I don't know for how much longer, though. The banks been after me like flies on a rib roast.
*cringe*
MAB,
I included your video in its own post. Here's something she said this week.
http://www.ajc.com/business/content/business/stories/2008/04/18/defense_0420.html
With many household incomes stagnant and job security a concern, that debt is dangerous, Warren warned.
There's that stagnant word again.
But how far the fall? How long till it's over? Bernanke says the trouble will last about a half-year. Others are much more pessimistic.
Put me in the "other" camp. Let's say he is right and the economy rebounds in the second half. What will food and energy cost if the economy rebounds? What will retail sales look like once food and energy are stripped out? If retail sales do what I'd expect them to do, how is that a recovery? Conundrum? It is my belief that you can't reinflate something that's already inflated. It has to deflate first. But hey, maybe that's just me looking at balloon physics.
http://news.yahoo.com/s/nm/usa_fed_fisher_dc
"To wrap ourselves in the toxic, defensive mantle of protectionism ... is akin to embracing inflation as a remedy to the credit market correction," he said.
We've been embracing inflation to bail us out since 2001. Unfortunately, in inflation adjusted terms that party ended in 2007 (as seen in the inflation adjusted retail sales data).
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