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So Far, Retail Sales Are Picking Up – Or At Least They Were

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Amazingly, June retail sales rose. Not just compared to May, but even compared to a “regular” June, which we had in 2019. If we include autos, electronics and furniture, sales were up for the month 1.1% year over year. That’s nothing short of amazing.

Of course, Big Ticket items like autos are a slam dunk with our current interest rates. Amazing how a low, low interest rate can get the velocity of money moving again.After resisting and resisting, I finally decided to re-finance my house, rather than just keep paying it down.A savings of $771 / month will do that for you.And in keeping with the spirit of money velocity magic, once I’m actually able to drive it places, I’ll use that money to buy myself the new car I’ve been coveting.Why not?

Well, there is most definitely a COVID fly in the ointment.If you live in Texas, Arizona, California or Florida (as I do) you know what I mean. Some people are just out and about: eating at outdoor restaurants, going to the beach, having a generally good time. Others, like me, are not feeling all that safe about the outdoor situation and are staying mostly at home.Why? New cases have been flying through the roof, followed by hospitalizations and then deaths.

It’s hard to know who to believe on which day these days or even if they know what they’re talking about. That brings me back to our theme of the year – agility. We know that most retailers will be closed on Thanksgiving Day.For me, this marks the end of a really stupid business idea that did nothing much more than keep families apart or otherwise focused on material goods, distort retailer forecast demand curves, eat up a lot of overtime dollars, and really irritate curmudgeons like me.But then what?Are we really going to have Zoom-Thanksgivings? What is Black Friday going to look like? Will people return to malls? And why? How are people going to buy Christmas trees?

I suspect we’re going to see a huge uptick in online sales and gift cards in the US.Walmart’s deal with Shopify is nothing short of brilliant, so it can be a really effective marketplace for small businesses.

Still, every time we have a holiday, we see a spike in COVID cases. We’ve been witnessing the after-effect of July 4 weekend down here in Florida. And so our advice to US-based retailers is to buy less.A lot less this year. Regardless of the state of contagion on Christmas eve, we are going to have a LOT of people who have been out of work.I mean a LOT.The $600 / week unemployment boon ends now, along with the moratorium on evictions. It could get economically very, very ugly.People not working. Families home schooling and otherwise cooped up in their homes for even more months.

Assuming we escape hurricane season unscathed, there’s still blizzard season and my old friend “winter” when everyone is forced back into their homes.And wildfire season, when everyone is forced out of their homes. TV shows are just about used up, really. People are grumpy and generally kind of poor.

And so, again, I really urge using a light touch for inventory buys.

I can’t predict what the next four months are going to look like.I sure as heck couldn’t have predicted the last 4. This is way above my paygrade. The part I am clear on is – buy less.Have open sources if you need to buy more. But be judicious.This could be a very, very long slog.

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Newsletter Articles August 4, 2020
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