Retail Sales: The Mother of Rear-View Indicators

Using Government-reported Retail Sales has never been core to my investment process.  Why? It’s old, and offers little to no insight above and beyond the NRF sales report two weeks ago, and leaves out the ICSC, NPD, and SSI reports that have already come in for the first 2 weeks of December.

 

Check out the definition on the Commerce Department’s web site; “Estimates are based on data from the Monthly Retail Trade Survey, Annual Retail Trade Survey, and administrative records.” So basically, they are taking the monthly SSS reports, synching with historicals that we cannot see, and using whatever ‘administrative records’ means, to come up with a monthly proxy for spending behavior for a third of US GDP.  Not too comforting, eh?

 

Translation = it’s a partially accurate lagging indicator at best.  Just ask holders of Best Buy.

 

But one thing that was interesting on the margin is that the chain store sales decline moderated, while gov’t sales accelerated in its recovery.  It also begs the question about how and where sales on-line are showing up.  Do you think Amazon’s numbers are showing up here? Probably, but I wouldn’t  be surprised if they found a way around it while tax structures remain loose for e-commerce retailers. While that will likely change, the allocating of these business is something to consider. After all, it’s tough to blow off $74bn in sales taking share from – well, everybody.

 

On the flip side, I’m surprised to see that the share of online sales is up by 1% to 4% over the past decade. Again, multi-channel retailers likely report as consolidated retail, while others do not.

 

 

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