Retail Sales - Various Thoughts

There are various changing dynamics regarding retail sales that I believe lack recognition.

For reference purposes, here are charts depicting overall retail sales, as seen in Doug Short’s post of April 14, 2014 titled “March Advance Retail Sales Retail Sales Beat Expectations“:

While the above chart seems to depict a continual (strong) upward trend, if one views the trend on a YoY basis the growth trend seems to be flagging:

As well, if one starts to interpret the trend in other ways, such as viewing the trendlines and population and inflation adjustments seen in Doug Short’s April 15, 2014 post titled “Real Retail Sales Per Capita – Another Perspective on the Economy,” one sees less robust – if not disconcerting – trends.

Of course, one of the main changes in retail sales continues to be the migration from “bricks and mortar” stores to online sales.  While there are many reasons for this migration, I believe that the economic consequences of such are very notable on many fronts.  Some of these issues I previously discussed in the June 13, 2011 post titled “The Changing Nature Of Retail – Economic Implications.”

However, there are other important factors as well.  One factor is that online retailing is an environment in which price competition is often – and easily – accentuated.  This is particularly noteworthy, especially in the current environment, in which overall price discounting appears to be intensifying in many segments.  I have discussed this discounting frequently in my ProftitabilityIssues.com site.  Intensifying discounting is one manifestation of a larger economic trend, increasing “deflationary pressures,” that I have often discussed.

Evidence of rising stress in retailing is becoming increasingly evident.  For instance, for a while now, “marginal” retailers (i.e. those less successful) have been closing stores.  However, recently the trend of closing stores in large numbers appears to be spreading to heretofore “successful” retailers, a trend which I believe is highly noteworthy.  Even the leaders in physical and online retailing, Walmart (WMT) and Amazon (AMZN), continue to have problematical aspects in their operating results.

On an “all things considered” basis, I believe the aforementioned trends will present various highly notable economic and business impacts.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1883.95 as this post is written