Another “Black Friday” Note

Going back to 2011, I’ve posted notes on Black Friday on LaMarotte, the last such being in 2013. The marketing efforts of an almost hysterical Retail Sector, intended to incentivize us to shop—with a mountain (or a log-pile, as Monique has put it) of paper—nicely drenched by the rain that fell from 2 am onwards early this morning. In my case it incentivizes me to think about the economy—and try to explain to myself the broad patterns I note and note again on the first Friday of every month when the Bureau of Labor Statistics (BLS) brings its employment report. Certainly since the Great Recession (2008-2009) I cannot help but think that something really new is in the works. The Consumer Society appears to be fading. Since that time has also coincided with vast troubles all across the world, the beginnings of what may some day be called the Thirty-Years War of the Muslim culture, the explanation for a continuingly sluggish economic performance here at home cannot be entirely economic. Indeed I don’t think it is. But the spine, the core, of it, is. We may be feeling the effects of a paradox. It is that for profitability business benefits by getting rid of labor in the work place (i.e. the Luddites had it right), but shifting more and more activity to technology has the paradoxical effect to curbing demand by depriving at least a part of the population of income.

The Consumer Society was based on confidence—confidence that jobs would be present; that holding one would be rewarding; that jobs would be safe, well paying; that income would grow with seniority. Needless to say, travel would be safe—and sending children to school would not be tantamount to sending them to a potential shooting gallery as innocent targets. The Great Recession, perhaps, was a kind of moment in recent history—like the fall of the Berlin Wall. It was the falling of global confidence in the economy.

One instance of this is the transformation of fulltime, permanent into temporary employment. A graph will illustrate this. It’s just a sliver of evidence, but meaningful. I present, below, data on part time employment since 1995. I have the data from successive reports of the BLS’ Current Population Survey; for a beginning point, see the link here.

Temporary employment began rising around 2000, shot up sharply in the Great Recession, and has stayed up there ever since—indeed is growing still. In 2015 we have nearly 4.5 million more temporary workers than we had in 1995. Full time employment grew 18.2 percent (1995-2015—from 101.7 to 120.2 million), temporary employment 19.8% (same dates, from 23.2 to 27.7 million). The annual rate of growth for fulltime employment is 0.84, that of temporary employment 0.91 percent. These are small numbers, to be sure, but the phenomenon is measurable. And if you know any people in their 50s, say, looking for permanent work and being able only to get temporary assignments—and we certainly do—those facts begin to circulate…and have an ever growing effect on one’s general confidence.

Sluggish Retail

Last year, at this time, I published a graphic showing the monthly retail sales of General Merchandise Stores—by way of illustrating the problems faced by retail trade—yes, even in this, the biggest, selling season of the year (link).

I thought that I would show an updated version of that chart. Here it is:

Last year I only had a few early months of 2012 to show. This time I show all of 2012 as well as results for 2013 through September.

Note particularly that these stores did better than in the earlier year in 2010, 2011, and in 2012. But when we look at 2013, the values achieved in that year fall right at, below, or slightly above the sales performance in 2012 all depending on the month. You might say that no real growth is showing at all. This explains the hysteria behind the Black Friday sales campaigns that I noted in the last post.

To illustrate 2012 and 2013 performance more sharply, herewith a bar graph, by month, of sales up to September. I have include two trend lines. The top line represents 2012, the lower line 2013. Note that trends in 2013 are lower—suggesting, if things continue in the same way for the rest of 2013, that this year will come in worse than last. Not the time to be in the retail business nowadays, as I heard a fellow analyst (and family member) say just yesterday. No. And these days the reliable alternative occupation, somewhere in Health Care, also looks rather dicey…

The data used in this analysis come from the U.S. Bureau of the Census, here, showing various sources of retail data.

Danse Macabre

I had an occasion Thanksgiving last to mark this occasion with an advertisement from Kohl’s. The ad was printed on the plastic sleeve that brought our Thursday edition of the Detroit News. That edition  has been, and remains to this day, by far the thickest, a kind of desperate package of retailer anxiety. Well, it has happened again. Herewith a picture of the 2013 Kohl’s ad:

Nothing like maintaining a tradition, don’t you know. The main difference between the 2012 and the 2013 ad? In 2012 Kohl’s doors opened at midnight on Thanksgiving; this year they will open four hours earlier.

Now I’m only singling out Kohl’s here because of its prominent self-display, for the second Thanksgiving running, looking much the same. But the rest of the paper this year, like last, shows the hysterical anxieties of the retail sector . Paging through the paper today, a single thought, in German at that, rose up in my mind: Totentanz—the Dance of the Dead; the French version produces the nicest headline.

Let us see now. This is the fourth year of our so-called recovery. By recovery our retail sector probably imagines the return of frantic shopping growing at more and more intense rates every year. The public, instead, is holding back. The Spirit of Consumption seems to have fled permanently. To be sure retail sales grew—in 2010, more in 2011, and more again in 2012; the growth, however has been sluggish. The flavor, smell, and rhythm of this growth has not been right, somehow. Is a really big change underway? Is the world recovering from many decades of madness? If so, very major changes in retailing are indeed unfolding in slow motion still and the hysterical danse macabre is thereby explained.

BF In Red

The plastic bag in which, this morning, the Detroit News reached my door. Amusingly Black Friday is rendered in red. And the sale begins at midnight this day at Kohl’s. It was a very thick bundle because every merchant wants a little sliver of this bonanza of a day. I separated the readable from the rest, which, in our household, is transferred straight into a Kroger paper shopping bag unseen. For recycling. What remained was 1-1/2 inches, the advertising material was 5 inches thick. Kohl’s, I am told, has pretty good prices, by the way, had such even before launching Operation: Black Friday. But rendering that name in red may be, for this merchant, courting disaster. What if you stay? In the red.

In a way this reminds me of the Greek who said, “All Greeks are liars.”

What Makes Black Friday Black?

As soon as I knew, I wondered why I’d been so stupid. That color comes from accounting. While your enterprise is loosing money, you’re in the red. On the Friday after Thanksgiving, you catch up, you’re in the black.

Black Friday ranks among the top ten shopping days of the year. Most of these fall into December, and traditionally the Saturday preceding Christmas ranks first. In the 1992-2002 period, Black Friday ranked low. In 2003 it was first, again in 2005. Thereafter we have no published numbers. Historical data come from International Council of Shopping Centers.

The Bureau of the Census reports retail data on a monthly basis but lags reality by several months. Last year I noted Black Friday by showing monthly retail sales, particularly for General Merchandise Stores—those most affected by the season; here two links (one, two). Today I update one of those charts, and it follows:

What this shows us is that retail sales in this category in 2011 were higher than the year before—but not by much. Indeed, the percentage increase October to November, which had been 19 percent in 1992, 17 percent in 2002, and 13 percent in 2010 has dropped to 12 percent in 2011. On this graphic I also show sales for the category in 2012—but we only have three months of data, showing how far back reporting lags. Those values indicate that 2012 should be a better year all around.

Now back to Black Friday. What we know about that day is that—if memory serves—it became generally known, by name, no more than five or six years ago. Until then the term was insider talk indicating that profitability is near or here. Since then it has become “an Event.” The media that reach me—and my e-mail—nearly bristle with news of salvation by Mega Savings. And then there is Cyber Monday, and on and on. I feel for these fellows.

In discovering all of the above, I also chanced across another name for Black Friday. It is called Buy Nothing Day (BND) and originated in Mexico in 1992. In 1997 it was then firmly linked to the Friday after Thanksgiving and is observed across the world as a protest against consumerism.

Guess what. I know exactly what to do on BND. I’ll stay at home and make some order in these endlessly growing towers of books.

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The data here are from the Bureau of the Census. Use this link to reach the page from which various reports may be obtained.

More October-November Retail Stats

Yesterday I showed retail sales for two categories (all retail and general merchandise stores) for three years (1992, 2002, and 2010). Today I am showing data on October and November sales for the same two categories and for every year in the 1992 through 2010 period.

My object, of course, is to throw some light on Black Friday, the day when, based on the retail industry’s experience, retailer begin to turn a profit for the year. My focus is on the general trend, and the graphics today do a better job in illuminating which way things are trending over an eighteen-year period. Here are the two charts:

What these patterns shows is that the October-to-November jump in sales is much more important for general merchandise stores than for retail sales as a whole. The latter have much bigger gains in this month, averaging 16.8 percent over the period versus retail as a whole, averaging 3.4 percent. The trend in month-to-month percentage gains is down in both cases, but the decline is much more pronounced for the general merchandise stores.

By way of contrast, the following graphic shows the same patterns for book stores. The performance of these retailers falls somewhere midway between all retailing and merchandising stores. The average percentage jump in sales, October to November, is better than for retailing as a whole, thus 5.3 versus 3.4 percent—but less than shown for general merchandise stores. And the trend, it turns out, is flat.

So what do we make of these trends—particularly the smaller-and-smaller jump in retail sales, October-to-November, experienced by general merchandise stores. Behind that trend, I propose, lies another and much more pervasive one. It is the gradual blurring of once much more sharply defined retail categories. Consider, for instance, that the largest grocery store in the United States is Wal-Mart. But for purposes of reporting, the Census Bureau categorizes Wal-Mart as a general merchandise store (NAICS 452910) whereas the Bureau places Kroger into the supermarkets and other grocers category (NAICS 445110). Wal-Mart-owned Sam’s Club has been featuring groceries since 1983; regular Wal-Mart stores have sold food at least since 1990, the year Wal-Mart acquired McLane Company (which it later sold), a grocery and food distributor. I am tentative about the date because I cannot discover exactly when Wal-Mart began selling groceries; maybe it always did. At present, according to Wal-Mart, half of its revenues are derived from groceries. Have they always? And under a 2010 program the company is restructuring small stores to be principally grocery stores.

Now, mind you, other major general merchandise stores are also selling groceries. One thinks of Costco and other warehouse clubs. And so are Kmart, Sears (which is owned by Kmart), Meier, and Target. So also are drug stores, for that matter. This is what I mean by a fuzzing of the definitions.

Quite possibly the ever smaller sales jumps of general merchandisers in November have something to do with internal shifts in the share of the product lines that they carry. As these stores come ever more to resemble “all retailing,” so also will Black Friday gradually grey out.