Posts filed under “Retail”

Do Appliance Sales Signal the Start of Housing Uptick?

Its funny how two people can look at the same data point and draw opposite conclusions. That’s what makes a horse race.

Sometimes, an inherent bias or wishful thinking comes into play; other times, its partisan ideology getting in the way. And in some instances, a little bit of common sense goes a long way.

Take as an example some recent data on appliance sales. In Q3, Best Buy reported a 10% jump in sales of major appliances (refrigerators, stoves, washers, dryers) at stores open at least a year, versus a 21% drop for the year-ago period.

Some analysts are suggesting this provides “a glimmer of hope in housing.”

“It’s the first real indication that the housing market is turning,” says Craig Johnson, president of Customer Growth Partners, a retail consultant in Connecticut. Johnson says he’s hearing from department managers and shoppers in the stores he surveys that the big appliance sales are “non-duress.” That means the purchases are being made voluntarily, not because an appliance has failed and left the consumer no choice . . .

I disagree.

Why are consumers making “non-duress” purchases? Well, if its because they are buying existing homes and replacing the older appliances, that would in fact be a positive sign for the housing market.

But we should not put the cart before the horse. Housing is falling more slowly year over year, and on a monthly basis has stabilized, thanks to 5% mortgage rates and government subsidies. That hardly accounts for the surge in sales (especially versus last year’s collapse).

My explanation involves two factors: Underwater homeowners unable to move, and Deflation.

The typical underwater homeowners are betwixt and between worlds; The average home buyer of the past decade is likely not so underwater as to be willing to walk away;  yet they don’t qualify for a mortgage mod. For most of these folks, their best option is to hunker down where they are, and ride the housing collapse out.

If you know you are stuck somewhere for five years (or longer), then you probably want to make that stay as comfortable as possible. Given the big drops in prices of major appliances — aka Deflation — an upgrade or replacement becomes a simple way for any family to raise their standard of living.

Higher end appliances have seen prices plummet 30-40%; We looked at a large French door refrigerator 6 months ago (2 doors up to, a bottom freezer drawer, integrated ice/water) for $2500; Its now $1899. The big washers and dryers (on pedastal drawers) have also seen hefty discounts. I imagine the price drops across stoves, microwaves, dishwashers are also substantial.

And America is still a nation of consumers, albeit somehwat chastened. More than a year into after the credit collapse, there must be some pent up demand out there.

Hence, a family that is underwater, but are in the 90% of the labor pool with an active breadwinner, can still spend some money on these home upgrades. And if my anecdotal experience at Best Buy, PC Richard, and Sears is anything to go by, in store credit for people with decent credit ratings are plentiful.

Consider this bit of weak analysis:

Some experts see clear stirrings in the long-morbund housing market. If efforts to ease foreclosures succeed, “there could be significant recovery in housing values in 2010,” says Michael Feder, president and CEO of Radar Logic, a real-estate data and analytics company. The firm’s composite index of 25 metropolitan areas found prices fell just 0.7% in the month ended Oct. 15, the smallest decline for that month since 2005. “Current trends are making us optimistic about demand,” says Quinn Eddins, director of research.

There is so much wrong about that, I don’t know where to begin. 1) Where foreclosures have picked up, real estate activity has risen; 2) Foreclosure abatements only delay the inevitable repricing; 3) Less bad i s not the same as optimistic; 4) By conventional metrics, housing prices still remain over-priced relative to their historical means.

Perhaps wishful thinking analysts are confusing correlation with causation. When appliance sales tick up, its usually follows a big move upwards in housing sales.  That does not really seem to be the case presently.

If anything, its likely the opposite . . .


White (Goods) Christmas?
Home for the Holidays
Barron’s, DECEMBER 22, 2009

Housing Is Shaky With U.S. Aid. Without It?
WSJ, DECEMBER 22, 2009

Category: Data Analysis, Retail

Snowbound Shopping

Fun and tiring day. We dug out early in the morning, then took the beasts for a romp in the snow. The puppy — now almost 1 — never saw a foot of snow before. (loved it!) We left the house about 11:30 for Dim Sum brunch. The roads were all plowed, but mostly empty….Read More

Category: Consumer Spending, Retail, Web/Tech

Last Minute Shopping List !

Back home from Florida — its a 60 degree temperature swing from Fort Lauderdale to NYC — and I suddenly realize that I have some shopping to do. I assume many of you are also behind on this most wasteful holiday of consumer spending frenzy. Here are a few items that are on my list…Read More

Category: Consumer Spending, Retail

The King Report: No, Retail Sales Did Not Improve in November

> ~~~ How can US beancounters report twice the expected retail sales when all private data and state tax data shows that November had tepid if not soft retail sales – even with the easy y/y comparisons? FOR IMMEDIATE RELEASE FRIDAY, DECEMBER 11, 2009, AT 8:30 A.M. EST ADVANCE MONTHLY SALES FOR RETAIL AND FOOD…Read More

Category: Data Analysis, Retail, Think Tank


Whatever little patience I had with Patrick Byrne, and his overzealous friends at, has now become officially exhausted. As I noted last week ( Scraping Facebook Friends), this group found the Facebook friends and relatives of any journalist, critic, fund manager or blogger who dared to  criticize Overstock (or Deep Capture), and then published…Read More

Category: Financial Press, Retail, Short Selling, Web/Tech

Strong Retail Sales in November

Nice chart via Econompic >

Category: Retail, Think Tank

Lucky Shopping Error

I mentioned the other night that I dawdled and missed out on making some cheap purchases at Amazon — the complete Curb Your Enthusiasm: Seasons 1-6:  and Dilbert 2.0: 20 Years of Dilbert. I had put it into my shopping cart, then promptly forgot about it. The next day, the prices had more than doubled…Read More

Category: Retail

What Do Online Sales Look Like This Year?

Black Friday saw more shoppers out, but each consumer spent less per person than they did last year. Cyber Monday — a nonsense term coined by the spin doctors over at the National Retail Federation in 2005 — was quite similar. No, it isn’t the largest online shopping day of the year, it merely is…Read More

Category: Consumer Spending, Retail

In Stock! Bad Holiday Sales Forecasts

One of the items that never seems to go out of style is the annual holiday sales forecast. Mix one part survey, one part “foot traffic” analysis, and an (un)healthy dollop of optimistic trade group spin, and the result is a cheery annual forecast. As the WSJ noted, “A postmortem of seven leading forecasters’ holiday…Read More

Category: Consumer Spending, Data Analysis, Psychology, Retail

History of “Black Friday” Is Not What You Think

Two Black Friday related issues. The first is Ethan Trex’ A Brief History of Black Friday (Mental Floss). Ethan disposes of the myth that the name reflects when Retailers “Get in the Black”: “According to researchers, the name “Black Friday” dates back to Philadelphia in the mid-1960s. The Friday in question is nestled snugly between…Read More

Category: Consumer Spending, Retail