Retail Eye in the Sky


New York – As the evidence that the stock market is gaining strength builds, economists are looking to other signs that the recession may be on the wane. Of course, the consumer is one of the most important ingredients in economic growth, so having an accurate and leading measure of shopping behavior is essential to getting the bottom right for the economy.Primary research in the form of channels checks is probably the best way to gain insight into the future of sales.  Primary research tries to guess the future hard sales numbers by looking at a number of indicators. These could be related to the demand or the supply of goods and services in the retail space. For investors, the goals to find a source of information that is highly reliable but has not been made widely available to the investment community. That means that we are looking for industry consultants that primarily collect and analyze data for firms in the industry that they cover.

One of these firms is ShopperTrak, a very well regarded source of information in retailing, but not fully absorbed into the investment community.  Indeed, ShopperTrak is one of the largest retail tracking services in existence.  The firm offers hardware and analytical services to retailers. The traffic tracking hardware analyses entry and exit data for a shop,  can provide the average time a shopper is in the store and also how many people that pass the store enter it.  In addition, the service tracks sales data and can therefore assess the conversion of store entries or traffic into sales.

Certainly, this is a useful service for retail chains, but is also of high informational alpha to investors.  One of the offerings that is highly prized by the financial services industry is the National Retail Sales Estimate (NRSE) which is an index of sales that is a leading indicator of the Commerce Department’s retail sales data. The index is produced weekly, from nationwide data and has been shown to be a good guide to future retail trade as consolidated by the Department of Commerce.

While channel checks are an essential element in many forms of research-such as deep-dive fundamental analysis-there are only about 15 firms in our database, which offer channels checking their primary research methodology.  Most of these firms have products that are designed for the investment community and are focused on some form of early alert systems for retail sales.  Many of these have relatively small sample sets from which to draw conclusions, do bag counting, parking lot counting, retail store manager surveys, or consumer surveys, but only a few have nationwide primary data collected at the store level, like ShopperTrak.


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