Secular vs. Cyclical

Shafer is wrong about Times piece

Jack Shafer finds a page one piece in Sunday’s New York Times about a slowdown in online retail sales to be bogus, another forced trend story. The original story says that online sales growth is slowing from a peak of 25 percent a year and is projected to hit nine percent by the end of the decade. Press Box feels the story is bogus because, by any measure, nine percent annual growth is good, is much faster than the economy as a whole and much, much faster than Wal-Mart’s sales, which are basically flat.

Also, online sales are already projected at $116 billion a year, so Press Box says, “In other words, Web retailing is totally huge, it’s still growing by leaps and bounds” etc.

The Audit doesn’t see it that way. It’s not fair to compare online sales growth to that of the economy or of Wal-Mart. Those kinds of numbers are cyclical. Wal-Mart is a mature company; its sales rise and fall with the business cycle, plus whatever the company can squeeze out through managing assets and allocating capital.

The Times is pointing out a secular, that is, a potentially permanent, trend, and an important one. Online sales are basically new, about 10 years old or so. Everyone assumed, I think, that their explosive growth would be such that they would eventually come to dominate retail. Remember when Time magazine told you to kiss your mall goodbye??

Total U.S. retail sales is $4 trillion a year. If online retail is starting to slow now, at about three percent of the total, to me, that’s news.

The Audit disgrees with Rabbi Shafer and declares the story kosher. One may eat of it.

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Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.