The stupids

Nothing quite says "stupid people at work" like stupid people using data they don’t understand to make an unrelated point about how the real world (in this case, the New York Times) is biased against their richly detailed fantasies. Try this:

More and more I suspect that is the catch phrase of the media today. The New York Times is indulging in wailing and gnashing of teeth because spending this Christmas is only up 3.6%. Only? Had the reporter gotten a 3.6% raise, he would be doing a happy dance down Broadway.

Or this:

Leave it to the sourpusses at the New York Times to cast a negative spin on Christmas sales that rose 3.6%.

[...]

Granted, the numbers weren’t as high as previous year, but how exactly is a 3.6% increase bleak?

I hate having to keep rehashing this same point over and over, but I’ll try and keep this brief:

Retailers this year invested heavily in marketing "loss leader" products to consumers in an effort to ‘buy’ market share away from their competitors. These products are sold at cost or below cost, which means that the retailer is not making any money; they’re just borrowing it until their bills come due to their vendors.Unfortunately this will not pay the rent, debt service, payroll, credit card processing fees, insurance, the electric bill, cost of shrinkage (theft) and all the other fun things that come with a business that does anything other than sell Beanie Babies on eBay. A key comment in the NY Times article that seems to have baffled people:

What did eventually sell was generally marked down — once, if not twice — which could hurt retailers’ profits in the final three months of year. “Stores are buying those sales at a cost,” said Sherif Mityas, a partner at the consulting firm A.T. Kearney, who specializes in retailing.

I hate to use personal/anecdotal stories to make a point , but I think this illustrates what I am getting at. Among other items, I made three of what I would call big ticket purchases for the pampered and enticing mrs tbogg this Christmas. Of those three, two were purchased at 50% off and the other at 30% off. Only the 30% item was an advertised special. The other two were unmarked in-store discounts on front-line, non-clearance products; in other words these were not products that were purchased by the retailer for the express purpose of being sold at a discount to drive customers to their door. That means that the companies selling these items were attempting to increase their cash flow and move excess product that they don’t want sitting on the sales floor during the upcoming dog days of January & February. And, more importantly, they weren’t willing to wait and gamble on the after-Christmas sales rush in order to do it. We call this "leaving money on the table" and it’s usually a sign of desperation.

The bottom line is that 3.6% growth, or 13.6% growth, means nothing if you are not selling your merchandise at the profit margin required to stay in business. The failure to understand this is why so many small retailers don’t make it, and all the discussions about GDP and the rate of inflation will never change this simple fact.