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Consumer Purchasing Trends - Tech Channel Index & Other Indicators of Consumer TrendsThe various metrics tracked in the Tech Channel Index (TCI) are based on a diverse sample of technology OEMs with significant sales through the channel. As a result of TCI's weekly feeds direct from channel partners and analyzed with proprietary methodology, the index is capable of providing insight into the health of the channel and the consumer well in advance of more traditional measures. But how has the TCI compared to more traditional measures channel and consumer health? Below the TCI is compared to several common measures of inventory and sales. Consumer Confidence Source: https://customers.reuters.com/community/university/default.aspx Surveys of consumer confidence are closely watched as a proxy of the prospects for manufacturers, distributors, and retailers of discretionary goods. Both major indices (The Conference Board and Michigan Consumer Sentiment Index) are based on monthly consumer surveys about current conditions and future expectations and are presented in an aggregate index value. Values are reported near the end of each month and represent the cumulative surveys conducted during the month. The below chart compares the TCI year over year (i.e., seasonally adjusted) change in retail channel activity with the Michigan Consumer Sentiment Index, 2008 year to date. 
As an example, the steep decline in retail sales activity that was indicated by TCI measures (and later confirmed by retailer and vendor public announcements) did not appear in the consumer sentiment index until the report released October 31 st. US Census Retail Sales Source: http://www.census.gov/mrts/www/mrts.html One of the most traditional measures of retail sales is the monthly data tracked by the US Census Bureau of the Department of Commerce. The Census data is based on a survey methodology but with a sample set including more than half of the US retail base and is detailed by type of retailers at the NAICS code level. Advanced estimates are released approximately two weeks after month-end, and are revised twice until final data is available (10 weeks after month's end). Below is a comparison of US Census reported sales for Electronics stores (NAICS #443) vs. TCI channel activity growth. The chart represents year-over-year (comparable months of 2008 and 2007) growth for both metrics. Note that the US Census data are plotted at the end of the month measured, not at the time released. Viewing in the context of when data is reported would mean shifting the census data points 2, 6, or 10 weeks to the right for advance, preliminary, and final numbers respectively. 
On a year over year basis, US Census measures and TCI measures appear to be positively correlated with no apparent systematic high or low bias to the measures, though with some level of added variance for the comparatively smaller TCI sample set vs. the US Census. US Census Inventory Data Source: http://www.census.gov/mrts/www/mrts.html The census collects and reports wholesale inventory data for the retail sector in a manner similar to that used for retail sales with two important differences. First, inventory data is not provided in "advance" estimates, only in preliminary (~6 weeks after month-end) and revised (~11 weeks after month end). Second, data for electronics retail is aggregated with furniture and home furnishings retail leading to a consistent downward bias in inventory as well as variations in seasonal cycles (e.g., back to school vs. home construction cause both effects to appear dampened). Despite the above limitations, the census data still provides a useful point of reference for TCI measures. Note, the Census data is reported on a months of inventory basis rather than weeks of inventory (shown on the right axis). For ease of comparison scaling has been adjusted. 
Inventory levels generally appear to be very well correlated with a notable exception prior to and following the back to school shopping season. TCI measures consistently show rising inventory levels prior to the back to school blitz (retailers stocking up, sales still moderate) followed by dropping weeks of inventory as sales increase and stocks are drawn down. US Census data, with furniture and furnishings data included, does not show a similarly pronounced trend. About the Tech Channel Index The Tech Channel Index is a unique compilation of point of sales and inventory data collected across the global indirect channel that is designed to provide this timely insight. As of August 2008, Index metrics and reports are derived by aggregating and normalizing over 5 million transactions collected from over 1500 distributors and retailers each week. Participating Index companies represent over $30 billion in annual channel sales in multiple high tech product categories. www.techchannelindex.com |
