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Thread: economic facts that CAN be spun - (same store) retail sales up

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    Default economic facts that CAN be spun - (same store) retail sales up

    Here's the headline ...

    (snip)"July 7 (Bloomberg) -- U.S. retailers’ sales are growing at the fastest pace in four years, a sign consumers may be overcoming concern about unemployment and depressed home values.

    Sales probably expanded at an average monthly rate of 4 percent in the first five months of the retail fiscal year that began Jan. 31, the biggest gain since 2006, the International Council of Shopping Centers trade group said in advance of its June report tomorrow."(snip)


    but here's the true 'under the hood' economics ...

    (snip)"Everyone is looking for signs of a continued recovery. Unfortunately there are many misleading signs that trap all but those willing to look beneath the surface to see what is really happening.

    For example, please consider the Bloomberg headline U.S. Retailers’ Sales Rise at Fastest Pace in 4 Years"(snip)

    (snip)"All of these pundits are barking about same store sales, an extremely misleading sign given retail stores are closing like mad.

    Month in and month out we hear the same nonsense about retail sales. I will believe it when I see state sales tax collections support the claims.

    Strip Mall Vacancy Hits 10.9 Percent, Approaches 1991 Peak

    Amidst all the fanfare of purportedly rising retail sales, those digging a little deeper note US shopping center vacancy rates rose in 2nd quarter.

    Retailers shuttered more stores in U.S. shopping centers during the second quarter, further delaying a rebound in the struggling retail real estate market, according to research firm Reis Inc.

    Shopping centers and strip malls have been pounded harder than other types of real estate, hurt by weak consumer spending, anemic job growth and an oversupply built to serve new housing that never materialized.

    "Until we see stabilization and recovery take root in both consumer spending and business spending and employment, we do not foresee a recovery in the retail sector until late 2012 at the earliest," said Victor Calanog, Reis director of research."(snip)

    (snip)"Same Store Sales - Misleading Sign

    Reis has it correct and so do I. Not only is it easy to beat record low comparisons of a year ago, same store sales are rising in part because stores are closing like mad.

    Circuit City closed its entire chain in bankruptcy, thus some of those sales went to Best Buy, some other places, and some sales simply vanished.

    More importantly, states have been reporting declining sales tax collections for the entire year.

    Admittedly state tax collection numbers are frequently delayed by a couple months, but that still does not jibe with overly bullish comments about sales over the first five months of the year from the International Council of Shopping Centers."(snip)

    from


    Put very bluntly, the purported increase in retail sales is based on dollars spent in 'same stores' that have been open for more than a year versus sales levels of months / years past. Unfortunately, this statistic does not take into account the fact that there are fewer stores remaining open today than there were in months / years past. Thus the reality of the situation may be that a chain of stores may have experienced a 20% overall decline in sales, but that the same chain has also closed down 30% of their branches, translating into a minor increase in 'same store' sales for the 70% of branches that still remain open for business despite an overall 20% decline in total sales dollars !!! Same principle applies to a particular chain of stores gaining sales when 100% of a competing chain's stores have totally disappeared due to bankruptcy ( i.e. Circuit City )

    ~
    Last edited by Melonie; 07-07-2010 at 06:36 PM.

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    Default Re: economic facts that CAN be spun - (same store) retail sales up

    Umm...... Can't you discount the trouble and loss of sales by brick and mortar stores by the rise in income and sales of online outfits?. I don't buy anything in the store anymore, I'm mostly on Overstock.com and the lot.
    We're in transformational times, in the early 1900's just because horseshoe sales etc. were down didn't mean the transportation business was collapsing- it just signified a switch to motor vehicles. I don't know exactly what retail sales on the grand scale are doing but judging them or the state of the economy solely on brick and mortars closing up etc. is not efficient or accurate.
    Last edited by jimboe7373; 07-07-2010 at 07:12 PM. Reason: grammar correction

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    Default Re: economic facts that CAN be spun - (same store) retail sales up

    ^^^ to the degree that internet sales actually 'overlap' brick and mortar store sales, yes increasing internet sales could be a factor. Unfortunately there is little hard data in this regard ... I found this though ...



    ... which tends to indicate that certain market 'segments' like books and clothing have a major fraction of overall sales via internet, while certain other market 'segments' do not. But the bigger questions of relevance in this thread would be how much change in sales volume has taken place over the past year for internet retailers - as well as how much of any change in internet sales volume was the result of overall customer spending versus customer transitions away from brick and mortar retailers and towards internet retailers.

    And to 'muddy the waters', in cases where a brick and mortar retailer also offers internet sales, there is no way to know whether or not reported sales by that retailer represents brick and mortar store traffic, or represents both brick and mortar store traffic plus internet sales via e-bay or amazon or through a dedicated website ! Thus we also do not know how much if any internet sales are already included in the above report of 'same store' sales.

    One 'barometer' of overall retail sales that is arguably independent of an online versus brick and mortar source is the National Trucking Index - which took a dip in May. Granted that the trucking index also involves lots of unrelated 'components' such as industrial parts / commodities shipments, wholesale goods shipments etc., so it is actually too broad of an economic indicator to provide any definitive answers re internet versus brick and mortar retail sales volumes.

    (snip)"The national economic recovery may come with ups and downs based on the dip in the May Truck Tonnage Index from the American Trucking Associations.

    According to the ATA, trucking serves as a barometer of the U.S. economy, representing nearly 68% of tonnage carried in 2008 by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 8.8 billion tons of freight in 2009. Motor carriers collected $544.4 billion, or 81.9% of total revenue earned by all transport modes.

    ATA reported a 0.6% dip in the seasonally adjusted index, ending five consecutive months of index gains and following an upward revision of 1% in April. The May report puts the index at 109.6 (2000 = 100)."(snip)

    from


    To 'muddy the waters' even further, it must be kept in mind that the retail sales report is measuring US dollars flowing into retailer cash registers ... not the number of actual goods being sold. Therefore if any retail price inflation is occurring it would show up as increased reported sales, despite the fact that this may actually represent American consumers spending more of their dollars to purchase the same number of retail goods at higher prices. However, the reverse could be true as well.

    Arguably the 'bottom line' remains that reported 'same store' retail sales figures aren't an accurate measure of anything truly meaningful. They do make for an encouraging headline though.

    ~
    Last edited by Melonie; 07-08-2010 at 02:30 AM.

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    Default Re: economic facts that CAN be spun - (same store) retail sales up

    ^^^^
    Overstock.com, Amazon and many others are huge and doing massive sales and have no brick and mortar stores. I do not know their figures and won't bother trying to find them but I can tell you that I and almost everyone I know does most of their shopping online now for most products.

    The expample of trucking as an indicator may also be suspect as most of those products are shipped through Fed Ex and UPS who also use planes and who may not report to the ATA as they are not a standard trucking company.

    I think you are trying to use old methods to calculate the new economy and they are obsolete now. Books, cd's, movies and many other products aren't even bought online and delivered now- they are downloaded right away. You can't track that commerce by trucking or retail stores closing but it is happening and more and more people are buying and selling that way every day.

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    Default Re: economic facts that CAN be spun - (same store) retail sales up

    ^^^ again no argument in regard to internet only retailers comprising a significant chunk of total retail sales dollars. The question is how much those retail sales dollars may have risen or fallen in the last few months - and that is an answer we do not have. And your point about increasingly 'inaccurate' traditional economic indicators in a morphing economy is valid as well ... which also indirectly confirms the original author's point about the 'inaccuracy' of the attempted conclusions drawn by mainstream media from the (same store) retail sales figures.

    The original author also offered the opinion that sales tax receipts dollars are probably the most meaningful indicator still available ... since to some degree sales tax receipts reflect both brick and mortar retail sales plus some portion of internet retail sales. While reporting of official statistics on sales tax receipts typically lags badly, they will eventually confirm or deny whether the 'same store' retail sales claims have any basis in economic reality.

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    Default Re: economic facts that CAN be spun - (same store) retail sales up

    Quote Originally Posted by Melonie View Post
    The original author also offered the opinion that sales tax receipts dollars are probably the most meaningful indicator still available ... since to some degree sales tax receipts reflect both brick and mortar retail sales plus some portion of internet retail sales
    Currently sales tax is charged on very, very few online transactions so that won't be much of a help either. We're in the middle of a revolution like the industrial revolution etc. and will need all new methods of calculating these types of things. Indeed our ideas and concepts of economy etc will have to change.

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