Satellite Imagery Reveals Sharp Retail Spending Slowdown After The Election

Tyler Durden's picture

According to various anecdotal reports, in addition to launching the stock markets on an unprecedented meltup, Trump's presidential victory has also boosted consumer confidence, leading to a spike in post-election spending.

That, however, is not only not validated by the actual data, but according to evidence, retail spending - a key component of the Trump "hope" trade - has actually slowed down.

One snapshot of what consumers did pre- and post-elections comes from the latest Bank of America credit and debit card data. The bank pulled daily card data and calculated “core control” sales which it defines as retail sales ex-autos, building materials, gasoline and groceries. It then indexed this spending on election day and compared it to the trends after the 2012 and 2008 elections. Noting the weekly pattern where sales pick up on the weekend, it finds that spending after the election was in line with the prior two election years. This year, sales accelerated a bit more as we approached the holiday season, however slowed down modestly in the days after. Overall, as BofA says, "there is little evidence of a particularly strong post-election boost in spending this year."

A more interesting report, one which relies on satellite imagery to look at parking lot activity of multiple US retailers in the pre and post election season, as well as over the critical Thanksgiving and Black Friday period, comes from JPMorgan. The summary conclusion: the analysis suggests significant activity weakness at core US retail locations, as JPM finds "that Y/Y activity trends worsened post the election contrary to stock market moves and color from some management teams."

Here are JPM's findings:

  • Leveraging Satellite big data. We are leveraging our own ability to manipulate and analyze large data sets against proprietary parking lot car count data from Orbital Insight. Orbital Insight collects satellite imagery and then applies proprietary machine learning based image recognition technology to count cars in parking lots on a daily basis. The data we are using here is comprised of over 280k daily datapoints spanning multiple years.
  • Big picture trends negative. We observe a deterioration of total car counts in aggregate that has taken place more post the election than prior to it. We find this interesting as it is counter to prevailing thought on Thanksgiving demand but consistent with weaker early Fall retail trends.
  • IT Hardware/Networking takeaways. We are already forecasting N. American handset units down 11% Y/Y in Q4 but we had been expecting very slight growth of 0.5% for PCs. Should consumer demand turn out sluggish over the Holiday season we believe Apple would be most impacted due to its high (~30% of unit volume) exposure to the US in Q4. QCOM, GLW and HPQ would also likely be impacted.
  • Retailing/Dept. Stores & Specialty takeaways. Larger picture, average Holiday traffic across our sample of 11 retailers under coverage has moved from positive low single digits in 2014 to flattish in 2015 to negative mid-single digits in 2016. Near-term and consistent with our field work, 4Q16-to-date has been a tale of two worlds with traffic down -6.0% in aggregate from Nov 1 through Dec 4 given the warmest November in 25 years improving to -3.2% in the week of Black Friday.
  • Food Producers/Retailers takeaways. We view the parking lot data as mixed for both Kroger and Whole Foods. To the negative, in the three week period following the election (11/14-12/4), traffic trends, which were already declining Y/Y, seemed to get a bit worse at both grocers. To the positive, there seems to be slight sequential improvement in the two weeks around Thanksgiving (11/20-12/4), an encouraging indicator.
  • Retailing/Broadlines & Hardlines takeaways. It is clear that the election disrupted sales with a snap back in the final two weeks of the month and better trends over the Thanksgiving periods. Most companies saw deteriorating trends in the QTD period vs. the Pre-election period. The largest decelerations were DKS, VSI, WSM, LOW, WMT and MIK. On the positive side TSCO was the only company to show improvement in the QTD period

Visualizing the underlying data:

JPM's conclusion: "Traffic data at retailers is uniformly weak after the election and since Nov. 1 As shown in the figure [below], year over year comparisons across the retail groups are uniformly weak.

* * *

Some more granular details looking at retail subsectors, emerge when focusing on department stores and specialty softlines.

Sifting through the satellite foot traffic data - we outline 4 primary takes over the October-December holiday timeframe the past 3 years. Larger picture, the declining foot traffic pattern across our Department Stores and Specialty Softlines space illustrated by the data since 2014 highlights the seismic shift away from legacy Brick & Mortar retail with mall based retailers scrambling to drive sales through promotion and Omni-channel. Larger picture, average Holiday traffic across our sample of 11 retailers under coverage has moved from positive low single digits in 2014 to flattish in 2015 to negative mid-single digits in 2016. Near-term and consistent with our field work, 4Q16-to-date has been a tale of two worlds with traffic down - 6.0% in aggregate from Nov 1 through Dec 4 given the warmest November in 25 years improving to -3.2% in the week of Black Friday.

JPM's key takeaways:

  • Take 1: Satellite Data Illustrates Multi-year Brick & Mortar Traffic Decline: Over the past 3 years, department stores and specialty retailers have seen a material shift in trends away from brick and mortar as illustrated by satellite traffic data herein. Specifically, within the holiday time frame of 2014 six of 11 retailers tracked in the data showed positive traffic moving to declines at 11 of 11 retailers in 2016. We attribute these changes to a shift to e-commerce spending and greater competition namely driven by Amazon.
  • Take 2: Foot Traffic Pre vs. Post-Election Unchanged w/ Weather to Blame: Consistent with historical precedent, the 2016 presidential election created significant disruption in retail as illustrated by Figure 5 and Figure 6 herein. Specifically several retailers (i.e. BIG, SIG) spoke to postponing marketing to the post-election period (anticipating disruption) embedding early November softness into plan as a result. Digging into the data, retailers in the sample showed negative -4.5% traffic on average in the pre-election time period with DDS, BIG, and M the weakest. While post-election traffic data stagnated at -4.5% on average vs. the pre-election timeframe which we also attribute to the warmest November in 25 years according to Weather Trends International.
  • Take 3: Early November Challenged w/ 2H Cutting the QTD Deficit In Half: Weeks 1-3 of November were challenging by our work, and supported by satellite data down -6% in November in aggregate (a slight improvement versus October - 6.5%), driven by a combination of the warmest retail start to 4Q in 25 years and election marketing dollar shifts. Digging in, we believe many retailers started below plan with some worse than others with satellite brick and mortar traffic trends pointing to softer trends at DDS, BIG, and M - noting this does not account for ecommerce.
  • Take 4: Black Friday Strength w/ Traffic Winners & Losers: Our store work points to a strong Black Friday (11/27 Boss' BF Weekend Eye - Consumer Win w/ Dec For All the Marbles; Field Work Pictorial) supported by satellite traffic data with many retailers making up for early November softness. Specifically, traffic improved to -3.2% over the Black Friday week versus -6.0% for November as a whole - consistent with our recent Chicago Mall Tours (12/6 J.C. Penney Co., Inc.: Digesting the Data Points: Tour Takes & Mgmt Follow-Up Points) and JCP speaking to “most retailers now within spitting distance of guidance”. Digging in, primary category winners over the Black Friday weekend  by the satellite date were the moderate department stores (JCP/KSS) and Off-Pricers (TJX/BURL) with M and DDS traffic remaining softer. Looking ahead, weather slated to be favorable in December with WTI’s forecast calling for temperatures 10-15 degrees lower YOY in weeks 2 and 3 boding well for traffic trends (and cold weather apparel sales).

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
NDXTrader's picture

No surprise. The consumer confidence numbers coming in at much higher readings is simply because half of the country is feeling euphoric. But that doesn't mean most of those common sense people are going to run out and blow their load on Christmas

manofthenorth's picture

What... wait..... you mean...AHHHHH !

MORE FAKE NEWS ????

Must be the Russians trying to ruin Christmas.

LowerSlowerDelaware_LSD's picture

These guys have never heard of Amazon and online ordering? Morons.

piliage's picture

Ding ding ding! We have a winner...

Kept reading the article to find the data on Internet sales... Nada

El Oregonian's picture

Nobody be Russian; nobody be rush'in to get to those mall stores...

 

Or else "Fake News" satellite ima(fud)ges... //sarc off

PT's picture

News Flash!!!  Income Minus Expenses Equals Money left over with which you can buy all the other shit.

I am absolutely gobsmacked that no-one appears to even know this equation.

errrr, okay then I'll modify it:

Income Minus Expenses Minus Repayments Equals ... aaaaaah fuckit, who am I kidding?  We know they're just gonna borrow more.  The only real questions left are:

Why have the banks stopped lending?
Or did the repos finally convince the plebs that there is no point in continuing to borrow?

AlexCharting's picture

First I thought, thats pretty interesting research. Then I thought, damn thats some creepy big brother shit. 

1980XLS's picture

Hedge funds been paying for that data for a while now. Not really new.

Problem is, due to online share  gains, it's about as good as Tits on a Nun.

Myself, 90% of everything I do is online, provided, they have free shipping & no sales tax.

That rules out Amazon. Fuck Jeff Bozos

RSDallas's picture

Give me  break

DavidC's picture

Call me stupid (yeah, OK!) but if more people are buying stuff online won't that mean that there are fewer people driving and parking?

DavidC

Sokhmate's picture

Unless they're shopping online from their cars in said parking lots.

Eagle40's picture

It's not about where you buy but how much and what you buy. Online sales are not making up the difference in total retail sales. Yes, online is taking away from brick and mortar but people are spending less so not only will you see less brick and mortar but more unemployed and less spending in general. Let us see in January and I will be willing to bet TOTAL RETAIL SALES FROM ALL SOURCES will be down. Just as past holidays it will be disappointing.

GreatUncle's picture

Next 10 years ... vote 2 options ... holiday disappointments will...

<< never end, it is the terminal decline of the economic system.

<< by some magic miracle of economics where an economic reset poor = elite by worth.

Not going to happen no matter all the lies and deceit of politicians and bankers, if anything it will continue to deteriorate.

*** You will fight in the end - the "they have taken everything limit" will be reached, mine was decade ago ***

The up vote is the only outcome unless they bust all that shit debt that is draining YOY the life of everybody. In that process great turmoil will occur and I don't reckon even the elites can guarantee 100% their own safety hence the continue forever.To do that you are going to demand your fair cut of all in this world wiping out elite value.

Now if WW3 ever starts they must believe they have a way to preserve themselves from the consequences of the upvote so if Clinton was prepared to start WW3 "how were they going to avoid it should have been the question" by all.

walküre's picture

Liberals trying to figure out how to starve the beast?

I see it when I believe it. What's next? Pension funds running out of cash?

NurseRatched's picture

The satellites will show that men have not yet started Christmas shopping yet because it is not yet the last Saturday before Christmas.

Don't we see the same damn report every year? The one where the consumer sits on the sidelines and the disappointed retailers start slashing prices and then the consumer shows up at the very end and sales are about normal?

Want to see me spend the Holiday Green? Find me a markdown on The Big Green Egg! Those damn things never go on sale!

Ed Jobb's picture

$2 billion dollar satelite looking at carparks, nuff said.

arrowrod's picture

Buy Amazon stock.  My UPS guy is getting downright skinny delivering packages.

stant's picture

We're they seeing cars aligned in the parking lot like a big give the bird?

SantaClaws's picture

"Call me stupid (yeah, OK!) but if more people are buying stuff online won't that mean that there are fewer people driving and parking?"

Agreed.  A good reason not to get investment advice from JPM.  The only real conclusion that could be drawn from the data is that fewer cars drove to the brick and mortar stores.  Maybe this year shoppers are concerned about hearing cries of Allah Akbar, followed by gunshots -- and are shopping online.

Or maybe vehicular repossessions are up.

Eagle40's picture

Online sales are not making up the difference in brick and mortar lost sales. Yes people are buying more online but they are spending less. The only thing different is people buying online but still spending much less. This is same thing I hear every year and the final result is total holiday sales disappoint. Trust me in January the total retail sales which include online will be bad.

Jack&#039;s Raging Bile Duct's picture

While I have no doubt that consumers have even less to spend this year, their assumptions may be flawed. I see no mention or comparison to online transactions.

True Blue's picture

Really: let's see UPS and FedEx YoY by volume or mass.

(Which makes me wonder -since their software automatically collects to/from information, I wonder if it is setup to aggregate all that info and analyze sales trends from specific retailers? It would if I'd setup the system; and that would be some damned valuable information, both to yourself and for resale to third parties...)

Eagle40's picture

Online sales are not making up the difference. Total sales down period.

wisehiney's picture

Just returned from the hell of city mall.

I do not know how people drive in that traffic every day.

It was nothing but a crawl until way out of the city.

I went in to pick up a kayak on sale for the nephew Christmas.

I walked into the huge mall just to check it out.

No less than a 1/4 of the retail spaces were vacant, maybe a little more.

Four large restaurants on the outside extension/walkway were also boarded up.

85% of the few people in the mall were just walking around, pushing babies, hitting the food court, not carrying any bags.

This is in a fast growing city/area.

Blue, blue, blue Christmas.

 

mary mary's picture

Malls are meeting places for teen agers.

flaunt's picture

bwahahahahahahahahahahahahaha!!!!!!  You have got to be fucking kidding me?!?!  I thought this was a JOKE but they actually use PARKING LOT SATELLITE IMAGES to determine how much consumers are spending?!  FFS THESE PEOPLE ARE PATHETIC!!!!

slightlyskeptical's picture

I work from a desk looking out my front window. As such i see every delivery truck that goes by. Volume is pretty low thus far. Next week will tell all. I would offer this info for a fraction of the price that they pay for that sat. data.

wisehiney's picture

Does not sound good for opec.

StreetObserver's picture

Let me give myself as an example:

I'm well off

I voted for Trump

I need new tires, a new roof, some new clothes, a new computer

I could easily go out and buy them right now

But, I refuse to spend any money in the Obamanation

Trump's administration gets all my spending.

Let's see what those parking lots look like in February ;-0

 

Clock Crasher's picture

Xmas gift from ZH readers to their family/friends they may want to attempt wake up

David Dees physical art books with over 100 prints

5 copies for $95

free shipping

http://ddees.com/index.php/2016/11/19/vol-1-2-special/

check it out