Oh no, Walmart is not doing well? Danger, danger Economy Sucks! Not according to the flower shop.
Before this last recession, readers of a long time here might recall that I used my flower shop as a barometer for the economy. I noted that things were not doing well as our sales had started to decline in August of 2006. The smart boys and girls called it December 2008 as starting December 2007.
Well, today it seems some people are getting concerned. I guess Macy’s did not do so well either. And these smart ones are holding their breath for tomorrow’s Target numbers.
The analysis? It’s either the retailers have lost their way but, as noted not likely or the consumer is getting smart and not over spending or and this one just kills me: “The economy is in collapse. That’s what’s going on.”
Really? The economy is in collapse?
Disregard the government data. Jobs and GDP and all the rest are at best inaccurate measures of the economy and at worst flat out corrupt. Walmart is capitalism writ large. .. When Walmart misses estimates, it can only mean one of two things: either Walmart or the American economy is weaker than anyone thought.
Yup, that’s what it is the corrupt government numbers are not to be trusted. Walmart et al are sucking big air right now and that means the economy is going down. I mean, it certainly couldn’t be the consumer having wised up and got the message of stagnate or declining wages while working whacked out hours and accomplishing little other than having stopped the dehydration.
I got news for these “smart ones”. The flower shop says things are holding their own. It’s not growing, but it’s looking like the first year since 2006 that we will stay even and maybe even up a bit.
“I don’t think we’re in a recession right now, but I think there’s a 50 percent chance we’ll be in one next year,” Davidowitz shouts, and there’s nothing the government is going to be able to do about it. “We’ve spent all the money, we’ve borrowed all the money, and we’re in the tank.”
Who do you believe? My flower shop and Spencer’s job analysis with Ed’s explanations or Walmart and the “smart ones”?
Walmart has had a same store sales problem for a LONG time. They were in such a rapid expansion mode no one was paying any attention to that though.
For the past two or three years Bloomberg has been documenting the problems at Walmart. They outsourced their restocking. They stopped hiring enough people to both man the floor and stock the shelves. They are no longer offering the best prices.
Losing control of their stocking is a great way to teach customers about their alternatives which include other retailers, grocers and discount shops. If you can drive to the Walmart, you can drive elsewhere.
Losing their price advantage was inevitable. Walmart is so big that when it squeezes a sector, the entire sector reshapes to follow the path followed by the folks who won the Walmart contract. That means that Safeway can get the same price on lemons, Target can get the same price on mens’ shorts, and so on.
In other words, I believe your flower shop. We are in a fragile recovery. We rent a summer cottage, and we just had the best year ever, but we’ve noticed an upmarket drift with our renters. Instead of Canada, China or the Caribbean, they’ll rent our house on the lake now that they are taking vacations again. They’re probably springing for flowers too. They’re an inexpensive luxury, like moving up a grade or two in eyeliner.
It’s sample size. Your flower shop is localized and is highly subject to a great many local influences, including great management.
Wallmart is spread over a much larger geographic area, and with multiple management qualities that diverge to the mean.
That’s why you should believe Wallmart over the single small business when you are looking at the macro data.