Sunday Spectacle CCVI

December Christmas Shopping Declining?

In developed countries, shopping during December for Christmas, which is the largest and most important shopping period for retailers, has been declining. In most countries (except Italy and Japan below*), annual retail spending is higher than it was in the past--at a minimum, rising population and inflation results in higher spending over time--so it doesn't mean people shop less. The Economist posits several possible reasons for the December declines (from The Economist's Daily Chart, Dec 25 2016):

There are at least three explanations for the recent decline in holiday cheer. First, the growth of e-commerce has made it easier for consumers to shop for seasonal items year-round. Second, the rise of gift cards—which are not recorded as sales until they are redeemed by the recipient—has shifted holiday consumption into January or later. Finally, younger shoppers may be dragging down end-of-year sales at many traditional brick-and-mortar retailers. Surveys show that millennial consumers are eschewing “stuff” in favour of experiential gifts like travel and entertainment.

(source: "Holiday shoppers are not spending like they used to," Daily Chart, The Economist, December 25, 2016)

(* You could sort of tell the health of a country by looking at the trend in retail spending. If you had no other information and had to make a blind bet based on the charts above (right side), I would say Japan and Italy are going to be tough environments for investors, as well as workers and society in general. The fact that retail sales are same now as it was 2010 doesn't signal good things. In contrast, you can easily tell that USA and Britain, and to some degree Germany, have clearly trended up and businesses in these countries likely have an easier time... Having said that, elements not reflected in the charts do influence things: low inflation does make the situation a bit better than it seems (such as in Japan); and whether the retail sales are funded by unsustainable debt (possibly in USA and UK more so than Germany??) can present misleading figures. But I think the trend is more important than those two elements for these countries. Japan and Italy do seem way worse off.)