The Tell-Tale Signs of Retail Recovery

One of the constant major annoyances in life these days is the propensity of the media to dwell on – and bombard us! – with negativity.  And never more so than during this recession.  So how should a retailer cut through the flak?  Just bemoan the negativity, and wait for things to get better?

Not in our view.  The better approach: identify the best leading indicators for retailers, and focus on those.

A few days ago we were debating this topic with a very savvy industry person.  "Unemployment is rising, TARP money isn't helping, sales continue to be off, bankruptcies are escalating.  Is there no turnaround in sight?" he kept bellowing. 

When he finished, we bellowed back, "Well, you're referring to trailing indicators. You're focusing on what already has happened, or is happening. Retailers need to monitor and be riveted on what will happen.  That is, what are the leading indicators that 'normal' shopping is about to resume?"

We continued, somewhat more calmly: "The key leading indicator for retailers is known as 'consumer confidence'.  Watch for monthly reports on this from government and private researchers.  (It's been rising slowly for three consecutive months.)"

"And a major component of consumer confidence is the stock market.  Yes, the stock market, where over 2/3rds of Americans have at least some of their net worth involved.  And that's been rising since March 6!"

Most of all, recognize those trailing indicators for what they are: last week's news.  The tell-tale signs of retail recovery will be revealed first in the most important leading indicator for retailers: consumer confidence.