How fast do trends take shape? When do we know that a string of data is actually projecting a trend that is upward, down sloping or whatever? Well, mathematicians will tell you if you ask them. Be prepared, however, with a lot of hems and haws. Predicting future numbers is complicated and as empirical as it would seem it really isn't.
Take employment figures reported monthly by the federal government. They attempt to report how many jobs were created and filled during the previous month. Even then the reports are rushed and are often corrected a few weeks later with more accurate information. Then there are the sub reports of this very same data that tries to tell you how many jobs were in government, how many in manufacturing, sales and service industries, and so on. It gets complicated and not all data reported to the government is done with pin point accuracy. So, tread carefully here!
And then there is the whole idea of trend analysis, what math analysis allows for false starts of trends, or micro seasonal data patterns that need to be withdrawn from the larger data study.
For example, fall labor statistics usually show spikes in hiring for the holiday retail season that approaches. Retail outlets hire armies of temporary employees to be sales clerks in crazy busy department stores and shops. Or at least they hope they will be busy! Sometimes they get the numbers right, sometimes not. This past holiday retail season they got it wrong by a large margin. The reason? Well, this isn't science, but there was a continuing trend towards internet purchasing of holiday gifts. This was expected but no one could accurately predict how much this would depress retail store sales.
But they were negatively affected big time. And stores were overstaffed for sales volume that didn't happen. To the extent these stores operated good websites supporting internet sales, they did well, just not at their actual stores.
Another trend is the massive move towards gift cards. Busy people find it difficult to determine exactly what a favorite niece or nephew wants or needs, and so opt for a gift card so the recipients can get exactly what they want without the hassle of returning ill fitting goods or simply miss-matched presents. This trend eats into store sales significantly.
Another data set difficult to calculate in trend analysis: duration of cycles of change. When data reports a surge of new activity – an upward trend – the next question is 'how long will this last'? Micro trends dot sales histories for every product and industry. Only the fool plans on a short upward trend to last. Best to wait and see how this trend will play out. The same is true for micro trends that slope downward on the graph.
Some data move in annual cycles, like real estate residential sales of the past. Still other data move in many cycles throughout the year reacting to many changing elements. Weather is such a variable element that affects sales trends in the retail sector. Interest rates are another variable. International economic growth patterns in major trading partner nations is yet another. So too, currency exchange rates throughout the international economy. We do live in a global community, remember! It does affect us here at home and will continue to do so as the world moves vigorously toward a dynamic, ever-present global economic model. We cannot undo this trend, so best we adapt to it with our eyes and brains wide open!
There is another variable we know about but give little notice to except for minor adaptions and annoyance. That variable is reporting errors. Each of us is fallible. Government is staffed by human beings so fallibility remains a variable factor always. We just learned that the Federal Reserve calculations on real estate residential sales data was reported in error for some years. Years! And yes this had an effect on the industry, banking and interest rates. Decisions are made on all of this data whether good or bad (decisions) or correct or wrong (data).
It is what it is and we have to assume the risk of making decisions based on the data provided to us. It is not done intentionally. And the reports are made in an ocean of other data that we can pull meaning from. Just because one report says one thing doesn't mean we have to trust it. We have eyes, ears and brains capable of our own observations and analysis. We need to rely more on that and school ourselves in what is reasonable and accurate.
Is the world changing? Yes. Is America changing? Yes. Is our neighborhood changing, our industry, our culture? Yes to all of these. We sometimes don't notice the changes quickly because we are living with them up close and personal. But changing they are and trends will change because of the changes.
So, where does that leave us? Right where we always have been, reliant on our own wits and thinking skills. What is a trend? What is a strategy? Are tactics different from strategies? What do words mean, and when do they mean such? When not?
Lots of things to think about. Often we should ask ourselves these questions:
- What business am I really in?
- What business do I really want to be in?
- Do people really want what I have to offer?
- Why do those people want what I have to offer?
The rest will take care of itself if you honestly ask these questions and seek solid answers to them. Be careful! It is easy to pull the wool over our own eyes here! Practice truly seeing the world and its people the way they really are. Then live accordingly.
Not easy, but then you will be bucking trends and making them react to you!
January 11, 2016
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