Retail Sales

Having posted in a few days due to the Thanksgiving Holiday and the fact that I was travelling. Hope the holiday was good for everyone.

I think we all know that people see or interpret events based on their paradigm. A paradigm is basically the way we see the world. If you were to believe the world was flat, you would interpret everything in accordance with that. Things that didn't fit into that belief system would have to be explained away or you would have to adjust your paradigm.

Now, I spent a fair amount of time at Malls and stores last week. It was clear that there were many, many people out shopping. My own observation was that most people were carrying shopping bags or packages indicating they were spending money. Now, watching the analysts talk about the results indicated the following. More people were shopping this year than last and they spent more money overall but less per person. At the same time, on-line shopping was up significantly, although it still represents a small but growing percentage of total retail.

Interestingly, the factoid that most of the analysts seemed to pick up on was that the average person spent less on average. If you own a store and total sales are up, even if by a small percentage, I'm not sure if the amount each person spends is important to you. I'm sure the ideal state is to sell all you inventory to a single customer, but selling all you inventory would be the more important event.

As I watched the analysts, discuss what it means that individual buyers were spending less individually, it soon seemed that the fact that after a terrible year for job losses and asset valuations, the total sales were up, even if only slightly, indicates a remarkable turnaround from the dire predictions of just a few months ago.

As I've been saying, we need to understand that the economy has contracted and needs to retrace growth. I would have expected sales to be down. Now last year was a bad year, but the period following Thanksgiving last year was simply terrible. Stores have adjusted with reduced costs and reduced inventories. If they have the same or slightly lower sales than last year they will be quite profitable.

Now, perhaps my paradigm is getting in the way, but I think we had a very successful start to the holiday shopping season and see no reason it won't continue. Now, that doesn't mean we will see the levels of two years ago, but I think retailer's are in great shape to profit.