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Need a Litmus Test of the Present Economy? I Have One

You’ve heard me talk about making good money in the stock market over the years and now I am going to reveal my secret.  It’s our retail store.  Our store is located in college town of 100,000 (not counting students) and for some reason seems to always correlate to what the overall consensus of the economy is presently at.    In a year that most people lost money in the market in the fall of 2008 and 2009 we actually made money on our trades.  We merely play the market based on how our sales are going and they always seem to be right

Here are some examples over the past year of what we saw.

In November of 2008 our retail sales dropped 80%.  The market was obviously starting to slip but at the time retail hadn’t been announced.  The banks were crashing but nobody knew how retail was going to react.  We knew it nosedived and shorted the market for a huge gain. Sure enough, retail numbers came out and everyone got killed.

In 2009 we noticed retail sales held strong but anything that had to do with service collapsed.  Everyone wanted to buy plants and goods but we couldn’t give away the planting service or landscaping.  People were trying to save money and do it themselves.  Fruits and vegetable sales were up 1000%.  Growing you own food and organics were the hottest market.  For the first time in 10 years, people were willing to pay more for organic.  Until last year they always wanted organic but weren’t willing to spend extra to get it

Here are this years trends we are seeing that I feel represent many businesses nationwide

Spending is back.  We are seeing spending back to levels of 2007 and early 2008.  For the first time in a couple years, many customers are buying regardless of a sale or some kind of discount.

Services under $1000 are strong again.  People are back to willing to let other people do things as long as it’s not too expensive

Fruits and vegetables are even hotter than last year

Seeing more cash than normal.  I don’t know if they were hoarding it but we have taken in more cash in the last month than we do in 3 months.  Checks are fewer and fewer.  Almost all credit cards

Online ordering and communication is being used by people of all ages.  I have 70 year olds texting in orders.

We screwed up our phone number in the phone book and people hardly noticed.  I forgot to switch the days we are open on the website and I received calls and emails all day.

People seem to be making up for last year.  Trees were down last year and we’re noticing people buying the next size up to make up for not buying it last year.

A lot more small cars in the parking lot.  I’m amazed how much they hold but because they are smaller we are making more deliveries.

You can compete with online vendors but it seems to require two things.  Knowledge of your material and selection.  It’s easy to shop online if you know exactly what you want but if you have questions most people will buy local. You just have to have the selection of these giant webstores.  You also have to be close in price.  You can get a little more than online but if there is a big difference they’ll pick you brain and then go home and order it.

I hope these give you a little idea of what we’re seeing this year.  It should inspire a little confidence in the economy and they fact that people are willing to loosen the purse strings.  We’re not out of the woods yet because there is one thing that hasn’t hit yet.  I noticed that in 2009 not many commercial building and expansion plans were approved.  It takes a few years for those to actual develop. We are still seeing the growth that was approved and financed in 2008  this year but it may be a slow commercial development year this year and next.

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4 Replies to “Need a Litmus Test of the Present Economy? I Have One”

  1. You are a consistently thoughtful writer. I appreciate reading your posts regularly. This one was great. I sure hope things are heading up because I have bet a lot on some recent decisions of mine=)

  2. Stock market is up 100% for many indexes (NAZ, R2K) from March ’09 lows without a 10% correction. That type of govt prop job better have results as they are throwing my taxpayer dollars at the equity markets.

  3. Well worth the read, I concur on your findings about consumer behavior and signs of recovery based on similar consumer activity trends that we are seeing on

    As a point of fact we had the most productive month in March since Septebmer 2008 and we know what happened that month.

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