To all of those higher-end retailers out there (that is, those who are not WalMart) -- many of you are doing it wrong and will be out of business if you don't change -- and soon.
Those who have followed me for a while know that I have had a "hard-on" for the diving industry for a good long time. The "industry" when it comes to gear has a habit of stocking nearly nothing, expecting people to buy at "full retail" (which is typically a mark-up from 40-100% or even more), come back for service and forcing that "continued relationship" by refusing to sell parts (so you can do your own service) and establishing "training" regimes that in my view are only loosely-correlated to actual capacity to perform (in other words, are more aimed at generating captive revenue than proving skills.)
There's a religious aspect to this "business" as well; the promotion of a given "brand" of certification over another, for example.
But this is not limited to diving. It shows up in all sorts of other places too.
The Internet has served to destroy a lot of the "barriers" that these manufacturers and dealers would like to keep up, and by doing so has brought price competition into the game. That has*****ed off the local dealers and some manufacturers as well.
Here's the problem in a nutshell, however: Value is the issue and the local retailers fall down badly when it comes to high-value items where they seem to think they have a "right" to 40, 50, or even 100% margins over their cost.
Many of these retailers seem to lack understanding that they're slitting their own throats and destroying their customer base's desire to do business with them through these policies. The consumer who loves partaking in a particular activity or sport to a significant enough degree will find a way to go around this sort of crap, and The Internet has helped out in that regard. The rest of the consumers who enjoy a particular activity but are not hell-bent on participation will simply walk off and spend their money somewhere else.
Let me give a hint to those "specialty" dealers in various lines of work: If you think you should be able to charge MSRP, where that price is 30, 40, 50 or 100% above distributor cost -- that is, a full retail mark-up -- then you have to earn that and a big part of doing so includes stocking the goods you want to sell so that the various assortment of styles and sizes that the customer may need to look at before buying can be examined in person before money changes hands.
You are not entitled to the customer's business. You have to earn it. And you don't do that by not having the style or size of a given product in stock, expecting the customer to order it sight unseen while paying your 40%+ mark-up for exactly nothing.
In short part of the cost of the game is having the product in the building. Yes, I understand the conundrum of doing so when you might get stuck with inventory and have to sell it at a far lower price. But this risk is a big part of the reason you get to charge that huge mark-up in the first place.
If I am willing to buy without being able to examine and fondle something before money changes hands I don't need the retailer at all -- I'll simply order online. If the local high-end retailer doesn't have what I want to look at in stock where I can examine and fondle it but expects me to order it from him -- an effectively-zero cost activity for him while allowing him to keep his normal retail mark-up -- he's utterly insane.
Now maybe it is true that there is a big fat sign reading "SUCKER" on the forehead of much of Boobus Americanus these days, but at least in this regard the Internet has changed things to a material degree. No longer do I have to submit to being bent over the table in these sorts of transactions, and no longer do I have to choose being financially abused by a local retailer if I really enjoy a given activity.
Those who argue that the issue between retailers and The Internet are largely about "Sales Tax" are utterly wrong. The root of the issue is that commodity products do not have a "hook" for a captive market nor a retailer's markup in the first place, and reasonably have margins that approach those of grocery stores. Higher-end products do have such a hook but the retailer has to earn their margin by having knowledge of the products, selection, stock and actual service or they will lose to Internet retailers who can deliver the same like-quality of product since they have destroyed their own market advantage by failing to carry stock, be knowledgeable and provide good value for the dollar spent in both product and service.
I have no sympathy for the local retailer, particularly for high-end products, that are getting "squeezed" by the Internet.
The bottom line is that these retailers deserve what is happening to them.
Consumer credit increased at an annual rate of 8-1/4 percent in May. Revolving credit increased at an annual rate of 9-1/4 percent, while nonrevolving credit increased at an annual rate of 8 percent.
It did eh?
Against a year-ago actual level revolving credit was up 1.16%.
Of course you can play all the "seasonal adjustment" games you want. You can also write stories that the consumer is "not deleveraging" any more, especially if you're from the media and cannot be bothered to actually grab the G.19 data from The Fed and plot it on a chart.
But you're misleading people by extrapolating "seasonally-adjusted" figures which could be arbitrarily "adjusted" when the actual year-on-year number is easy to look at and determine the actual change from year-ago levels -- which is what I do around here.
And that's up 1.16%, and as you can easily see it is following the pattern that is seen every year. That is, credit card balances rise right around this silly holiday called "Christmas" and then are paid off some before starting to go up (a wee bit) once again, only to spike (again) at Christmas the next year.
Now as for Non-revolving credit, that's a different matter. It's skyrocketing in outstanding amount, up some 8% annually. But as we have also seen of late the majority of that is student loans, and that trend has continued.
There is, however, some evidence that the total rate of increase is starting to curl over a bit, appearing to be mostly a flattening of the non-student-loan growth rate, which is running just over 3% on an annualized basis.
Don't drink the Kool-Aid.
Google has reportedly paid the makers of Adblock Plus, the single most popular browser extension on Chrome and Firefox, to look the other way when it comes to its web advertisements. According to the German news site Horizont, Google and other unnamed companies are paying to be included on a "whitelist" that prevents their pop-ups, banners, and display ads from being blocked by the free service.
Such is the hazard of loading something that is allegedly "free" to you.
Nothing, of course, is actually free. Someone has to maintain whatever service you are obtaining, and that someone has to be paid -- somehow.
But heh, who would think that an add-on that allegedly is supposed to "block" advertising would exempt certain people who paid them from, well, being blocked.
THERE IS NO SUCH THING AS A FREE LUNCH.
Hattip John Clark.
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in May on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.4 percent before seasonal adjustment.
The shelter index rose 0.3 percent and accounted for more than half of the seasonally adjusted all items increase in May. The energy index rose modestly, with the gasoline index flat but increases in the electricity and natural gas indexes accounting for the rise. The food index, however, turned down in May, with the food at home index falling 0.3 percent.
So from the headline you'd say "steady as she goes."
So how do the internals look on this?
There were some pretty-large increases in electrical cost this month -- in fact, more than the annualized rate of increase last month alone. Gasoline also went up, breaking a trend that had been solidly negative for a bit.
The other major jump was in lodging -- which I can confirm down here anecdotally. I don't know how well this will hold up, but this much is apparent -- the hotel folks here think there's plenty of demand to support higher prices and are charging what the market will bear. We'll see how that works out for them as the summer goes onward. I don't see, however, the traffic levels on the roads that one would expect to go with the pricing. Hmmm....
The other interesting claim is that health-related costs appear to be up around 3.5-4% annualized. If true and sustained this is a major change, but I'm skeptical because we've seen this pattern before -- and then you get a 12-15% print the next year. But this is (mildly) encouraging -- check back with me next summer to see if I still think it is.
All in all there are no big surprises in here.
In April, consumer credit increased at a seasonally adjusted annual rate of 4-3/4 percent. Revolving credit increased at an annual rate of 1 percent, while nonrevolving credit increased at an annual rate of 6-1/2 percent.
You know my view -- I use unadjusted numbers, and look at both rate of change and the raw figures. So let's do it.
Revolving continues to bounce around zero; of interest is that non-revolving is starting to curl over on the rate of increase.
What do levels tell us?
Well, most of it was autos in the non-revolving area, basically. Student loans only went up $1.425 billion (out of close to $10 billion total), but this is to be expected as this isn't exactly a month where people enter college, right?
Revolving was up slightly -- $2.5 billion, but paid down some $38 billion from Christmas. Balances should, if trends hold, start rising shortly (like in next month's report.)
Here's an interesting and somewhat-disturbing fact though -- last year at this same time consumers managed to pay off $44.6 billion from Christmas. That additional carried balance is bad, not good, especially into flat hourly earnings and flat-to-down work hours.
Over all there's not a lot in here to write about; there certainly is no "resurgent boom" in consumer credit.
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