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The rise and fall of retail predictions
October 22, 2009
In the Oct. 12 issue of The New Yorker, there's a fasci
nating article about people who use patterns and cycle theories to predict such things as economic trends, stock market fluctuations, even periods of social unrest (wars). The article, The Secret Cycle, by Nick Paumgarten pays special attention to a man by the name of Martin Armstrong.
Years ago, Armstrong studied the timing of the financial panics that occurred between 1683 and 1907, did some fancy math and found that on average there had been a panic every 8.6 years, which equals 3,141 days, which equals the number pi times one thousand. He kept his findings secret, began applying it to the financial markets, and eventually became a $10,000-an-hour financial consultant. The article delves deeper into Armstrong's success and eventual (some say wrongful) imprisonment, as well as the experiences of other cyclomaniacs with fibonacci numbers, numerology, astrology and data sets.
Since reading the article, I've woken up in the middle of the night -- more than once -- wondering if one of these cycles could be used to predict the rise and next peak of the retail sales cycle. I found myself thinking about it again this week while reading some of the predictions and forecasts for the upcoming holiday season.
During her presentation at the High Point Market yesterday ("State of the Industry and the Consumer Mindset"), Home Accents Today Editor-in-Chief Jenny Heinzen York briefly touched on the subject (holiday sales forecasts - not fibonacci numbers). Jenny shared the National Retail Federation’s numbers which predict holiday sales will fall 1% this year to $437.6 billion. Jenny then asked me to share some information that the NRF released on Tuesday of this week, the results of its 2009 Holiday Consumer Intentions and Actions Survey, conducted by BIGresearch. Those findings reveal that U.S. consumers plan to spend an average of $682.74 on holiday-related shopping, which translates to a 3.2% drop (about $22 per shopper) from last year’s average per-shopper amount, to $682.74. I also mentioned a clip I found that said retail research firm ShopperTrak this week predicted that total holiday sales are going to rise 1.6% compared to last year.
I guess it just depends on who you believe.. and whether or not you believe consumers follow through on their "intentions." I hope they don’t, and that they spend even more. In fact, based on the buying and upbeat atmosphere at this week’s High Point Market, my prediction is that we’re going to have a happy holiday retail season... or are we?
Let's take Armstrong's mysteriously accurate 8.6 model, and apply it to the NRF's average holiday spending chart (by year). Average holiday spending peaked in 2007 at a whopping $763 per shopper which, if we look ahead 8.6 years, means we're not due to peak again until mid-year 2016.
However, if we subtract this year's predicted spending average of $682.74 from the 2007 average of $763.40, the result is... $80.66!
Of COURSE it's a stretch, and I have been called out more than once for being overly optimistic, but in this regard Paumgarten, through another source, attributes an interesting quote to J.P. Morgan -- "Millionaires don't have astrologers, but billionaires do."
Posted by Susan Dickenson on October 22, 2009 | Comments (1)
