a US holiday shopping post-mortem

Information is trickling in about how the holiday shopping season in the US went.  What jumps out at me (not necessarily exactly what was said) so far is:

–overall retail sales were up by 3.8% year-on-year.  To my mind that’s great, not the disappointment (vs. expectations of +3.9%) it’s being pitched as.  The reason:  the comparison is between the shortest possible holiday season, in 2013, and the longest possible in 2012.

–extended store hours didn’t appear to do much for sales.  It increased costs, though.

–the weak got weaker (think:  Best Buy, Sears, JC Penney).  Sears and Penney are both closing stores.

–Macy’s is laying off 2,500 in-store workers and hiring an equal number to work on its on-line offering

–mall traffic (not sales necessarily, but the number of visits by potential customers) is down by 50% from three years ago

–on-line sales were up by 9.3% yoy

my take

I’ve begun to believe that generational change–a passing of the baton from the Baby Boom to Millennials–will be an important stock market theme in the US for years to come.  I think the just-passed holiday season is evidence in favor of this idea.  (By the way, I heard the other day–but haven’t checked the source–that the single most important attribute to current car buyers is the technology in the car, not styling or engine power.  If I heard correctly, another piece of evidence.)

I’ve always thought that the greatest risk to equity portfolio managers performance  is that as they become more successful and wealthier, they gradually lose touch with the way normal people live their lives.  As that happens, they become less able to see the economic currents that ultimately influence stock prices.  Celebrity hedge fund managers are particularly vulnerable, in my view–but that may just be my prejudice.

Why is this important?    …because you and I will see this change going on long before the professionals do.  So we’ll be able to find the names and position our portfolios to benefit in advance of the wave of buying that will come as the light bulb comes on for gated-community pros.




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