Tuesday, June 14, 2011

Sorry, Your Call Cannot be Completed at this Time

You get a catalog in the mail and an item stands out far and away: its perfect, exactly what you’ve been looking for for months.  And you think it couldn’t have come at a better time, you really needed this, and you’re happy to cross it off your “to-buy” list.  You rush to your closest PC to place the order (maybe they’ll also have some accessories to go with it!).  You are able to successfully find the item and just as you attempt to put it in your “checkout cart” you read – “sorry, this item is temporarily out of stock.”  What a disappointment, how annoying.  You were so excited and now you might as well be at square one.  Who knows how long “temporarily” is – or worse, what if they never get the item back in stock?  Your day now has a black cloud, thank you store.

You wouldn’t be alone if you were confused by this development – aren’t businesses complaining that sales are down and are pessimistic about people like us spending more money?  Shouldn’t they want us to spend, so shouldn’t they be sure to have their items in stock?  To understand just how long “temporarily” is we may wonder why the item is out of stock.   Are people buying the item faster than it can be made (in which case you picked a hot ticket, trend follower) or are sales so dismal it is not worthwhile financially to keep the item in stock (cold ticket)?  Data released today shows our spending patterns over the last month were mixed.  Although we are still spending gangbusters compared to last May (up 7.7%), month over month spending was up by 0.3% (and down by -0.2% if you include cars & gasoline).  Last month we spent more at internet only stores (at least we are trying to), building & garden supplies (hello summer), and at pharmacies (big spender).  We spent less at electronics stores, furniture stores, and hobby & book stores (surprise) in May over April.

Another way we might be able to tell what “temporarily” means is by looking at trends in how much stuff businesses are keeping “in stock” (their inventories).  If businesses are building up their inventories it likely indicates that businesses expect to see increasing sales in the coming months.  That is good news for us, especially for those “hot ticket” items everyone wants that we just don’t want to wait for (what good is a bathing suit ordered in June if it doesn’t get here until after Labor Day, not helpful).  Conversely, if inventories are down, businesses are preparing for slowing sales and do not find it worthwhile to keep our favorite items in stock.  Data released today shows mixed news – Inventories went up in April over March, but at a slower pace than in March over February (0.8% vs. 1.2%).  Further, total reported sales in April were up by just 0.1%, after increasing by 2.4% in March.  This may cause businesses to hesitate to see where sales are going before adding large quantities of inventory.

Finally, we can look at the type of company we are trying to place the order with.  If the item “temporarily out of stock” was from a small business, there is reason to be less confident about the length of “temporarily.”  According to a survey of small business released today, small businesses are stuck in a cycle of not feeling the economic recovery.  The small business “optimism index” is rather pessimistic as small businesses say sales are down and prices are up.

Putting it all together, we may conclude that we shouldn’t hold our breath for the item to be imminently restocked.  Businesses are not sure if it’s worthwhile to have the quantity of stuff needed to have a stockpile since they aren’t sure where the economy is heading.  Perhaps if enough people put the item on their checkout “wish list” businesses would be more inclined to produce more of the item and have extra quantities in stock.  Or you could always call the company and nag them until you get an answer.  In other words, please hang up and try again.

(Census Bureau, National Federation of Independent Businesses)

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