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RETAIL ACTIVITY INDICATORS | First Half of 2019

A semi-annual report prepared by

LFA Implementing Partner

N I N T H E D I T I O N

RETAIL ACTIVITY INDICATORSFIRST HALF OF 2019

03


ContentsAcknowledgments ......................................................................................................................................................................5

Executive summary ....................................................................................................................................................................6

Foreword ........................................................................................................................................................................................ 13

Introduction .................................................................................................................................................................................. 18

I. Methodology ............................................................................................................................................................................. 21

II. The economic backdrop .....................................................................................................................................................26

III. The indicators ......................................................................................................................................................................32

IV. The analysis ........................................................................................................................................................................... 63

Concluding notes ...................................................................................................................................................................... 84

Opinion ........................................................................................................................................................................................... 85

Stability undermined: Raging trade war prompts calls for second international reserve currency

Appendix......................................................................................................................................................................................... 91

Previous editions of the Retail Activity Indicators report .................................................................................... 95

05


ACKNOWLEDGMENTSThe Lebanese Franchise Association (LFA) and QuantAnalysts are grateful for the valuable technical

assistance the Industrial Research Institute (IRI) has offered to the Retail Observatory and to the

retail indicators project.

The LFA and QuantAnalysts are indebted to Dr. Nabil Fahed for the valuable support and constructive

advice he continues to offer to the project.

Special thanks are due to Ms. Nour Nasr for putting her expertise in quantitative methods at the dis-

posal of the project.

RETAIL ACTIVITY INDICATORS | First Half of 2019RETAIL ACTIVITY INDICATORS | First Half of 2019

07 06

EXECUTIVE SUMMARYTHE RETAIL SALES PERFORMANCE INDICATORS IN 2018

The ninth edition of the LFA-CCIABML Retail Activity Indicators presents retail sales indicators for

the first half of 2019, and compares them with those of the second half year and the first half year of

2018. To preserve the integrity of indicator time series, the report retained 2012 as the base year and

followed the processing protocol adopted since the inception of the statistical exercise.

With lengthening time series, the report introduced more advanced trend analyses, while maintaining

alternative trend detection procedures and analyzing change in trend parameters across time frames.

1. The overall indicatorIn the first half of 2019, the overall retail sales performance indicator for the nine categories of goods and services covered by the report was 5.51 percent higher than its level in the first half of 2018.

That indicator was down 2.62 percent from its level in the second half of 2018.

The sales indicator for all nine categories of goods and services remained 8.36 percent below its 2012 base year level.

2. The sales performance indicators by category

Of the nine categories of consumer goods and services included in the report, the sales performance

indicators of four categories declined in the first half of 2019 as compared with their levels in the

same period of the preceding year.

THAN ITS LEVEL IN THE FIRST HALF OF 2018

2012 BASE YEAR LEVEL8.36%

5.51%

In the first half of 2019, the overall retail sales performance indicator for the nine categories of goods and services covered by the report was:


09 08

Declining indicators in the first half of 2019

By order of the magnitude of the decline, retail categories that saw their sales performance indica-

tors decline are: cosmetics, clothing and fashion, sports and hobbies goods, and medical services.

� The retail sales indicator for cosmetics was down 35.68 percent from its level in the first half of 2018. That indicator was 25.58 percent below its base year level.

� The sales indicator for the clothing and fashion retail category was down 13.22 percent from its level in the same period of the previous year and stood at 51.69 percent below its 2012 base year level.

� The sports and hobbies goods sales indicator was 3.93 percent below its level in the first half of 2018. That indicator was 51.49 percent lower than its 2012 base level.

� The retail sales indicators for medical services decreased by 2.39 percent in the first half of 2019 from its level in the corresponding period of the previous year. That indicator, however, was 40.39 percent above its base level.

Advancing indicators in the first half of 2019

Five retail sales indicators staged advances in the first half of 2019. By order of magnitude of the

advance, these indicators are those of hospitality services, food and beverages, the household goods,

luxury goods, and tourism services.

� The retail sales indicator for hospitality services rose by 45.4 percent in the first half of 2019 as compared with its level in the same period of 2018. That indicator stood at a level 27.99 percent above the 2012 base year level.

� The food and beverages sales indicator was up 41.19 percent form its level in the first half of 2018. That indicator was above its 2012 base year level by the broadest margin of 71.34 percent.

� The household goods retail sales indicator moved up by a moderate 4.76 percent in the first half of 2019 and remained 32.62 percent below its base year level.

� The retail sales indicator for luxury goods was 2.92 percent higher than its level in the first half of 2018. That indicator recorded the broadest fall from its base year at it stood at 55.6 percent below the 2012 level.

� The retail sales indicator for tourism services advanced by a minimal 2.88 percent, and was a min-imal 2.04 percent above its base level.

- 51

.69%

+71.

34%

+40.

39%

+27.

99%

+2.0

4 %

- 32

.62%

- 25

.58%

- 51

.49%

- 55

.6%

- 8.

36%

HOUS

EHOL

D GO

ODS

MEDICAL SERVICES

SPOR

TS A

ND

HOBB

IES

GOOD

S

LUXU

RY G

OODS

TOURISM

SERVICES

HOSPIOTALITY SERVICES

ALL

NIN

E CA

TEGO

RIES

COSM

ETIC

S

FOOD & BEVERAGES

CLOT

HIN

G AN

D FA

SHIO

N

64.00

44.00

24.00

400

-16.00

-36.00

-56.00

Retail sales indicators in the first half of 2019 in relation to 2012 base year level


11 10

3. Sales performance indicators that hit dataset highsTwo retail sales indicators peaked at a six and a half year high in the first half of 2019. These are the

indicator for the food and beverages category and the indicator for the hospitality services category.

82.00

92.00

102.00

112.00

122.00 Half-yearlsalesindicator- hospitalityservices

63.00

83.00

103.00

123.00

143.00

163.00H1

-201

3

H2-201

3

H1-201

4

H2-201

4

H1-201

5

H2-201

5

H1-201

6

H2-201

6

H1-201

7

H2-201

7

H1-201

8

H2-201

8

H1-201

9

Half-yearlysalesindicator-food&beverages

4. Trend analysisThe interpretation of retail sales performance indicators derives from the adoption of four different

but complementary statistical approaches namely, the de-seasonalization of indicator time series,

the moving average approach, the parametric trend approach, and the non-parametric trend ap-

proach. Combined, these approaches impart added understanding of the datasets and could facili-

tate projections.

All nine categories of goods and services


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Overall retail sales indicator

The linear trend line for the 78-point seasonal-

ly adjusted indicator data set for all nine cate-

gories of consumer goods and services took a

turn upwards as it traced a steeper gradient of

+0.155 compared with a gradient of +0.132 for

the 72-point indicator data. However, the slopes

for the 66-point data and the 60-point data sets

were steeper at +0.163 and +0.165 respectively.

The locally weighted fit for the seasonally ad-

justed overall retail sales indicator conveys

three distinct phases. The first exhibits a per-

ceptible uptrend covering the first 24-month

series, the second phase traces a marked gradi-

ent decline in the 48 months that followed, and

the third phase covers the first half of 2019 and

shows a resumption of the uptrend.

The chart line for the seasonally adjusted over-

all indicator remained below the 2012 base year

level except for two data points out of 78, where-

as the trend line remained well below base year.

• The retail sales performance indicators for

three categories of retail exhibited a negative

trend over the 78-month period. These cate-

gories are, in decreasing order of magnitude

of the rate of decline: clothing and fashion,

tourism services, and luxury goods.

• The performance indicator data for six cate-

gories of retail formed a positive trend over

the 78-month period. These categories are, in

decreasing order of magnitude of the rate of

ascent: food & beverages; medical services;

hospitality services; cosmetics; sports & hob-

bies goods; and household goods.

About the present report

The ninth edition of the Retail Activity Indicators

report bases its statistical analysis of indicator

data on 78-month-long time series. The longer

time series enhance the reliability and robustness

of the seasonal adjustment procedure, correla-

tions, and trend parameters. The longer series have

also made possible the introduction of the locally

weighted fit as an approach to trend analysis.

The report’s rationale

As a guiding reference on retail trade, the report

continues to introduce more advanced proce-

dures to the exercise of building retail activity

indicators. This exercise seeks to fill a gap in the

national statistics platform, to provide retail en-

terprises and prospective investors with quanti-

tative knowledge about the retail industry, and

to put at the disposal of representatives of the

retail industry the quantitative basis to carry out

their advocacy mandate.

FOREWORD


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The ninth edition of the LFA-CCIABML Retail Activity Indicators report builds retail sales perfor-mance indicators for the 78 months to June 2019, presents their evolution on monthly, quar-terly and half-yearly bases, and analyzes the underlying trend.

A cursory overview of the 78-point indicator data for the report’s nine retail categories conveys a fleeting impression that the seven-year-long downtrend may have bottomed out.

In trend-analysis technicalities, a slower rate of decline can hardly be construed to indicate an impending trend reversal. As a matter of fact, even if further rates of decline become asymp-totically close to nil, retail activity could still be looking at a more or less long flat bottom.

Judging by unchanged fundamental determinants of consumer spending, the downward point-ing trend line may be plateauing, but recovery could still be far off.

Weak consumer spending, the root cause of the retail sector’s slump, is a systemic warning sign and as such it can only be reversed by broad and deep-reaching reforms.

Variables determining consumer demand: the building blocs of a consumption model

Locally generated consumer demand is a function of five main variables that have a direct impact on purchasing power. These are: change in the level of household after-tax income; change in prices of consumer goods and services; change in taxes levied on consumption; change in household net worth; and change in the demand for consumer credit.

Factors that impact consumption expenditure over the medium term

Household after-tax incomes, household in-debtedness, household net worth, and inter-est rates impact consumption over the medi-um term.

A factor that impacts consumption expenditure over the long term

Demography

Under normal conditions, the demography variable changes at a snail’s pace and is hence usually attributed a long-term impact on consumption. However, in Lebanon’s ex-ceptional circumstances where demographic change has occurred at a dizzying speed, re-tail markets should have gained much vigor over the past seven years.

On the supply side

Supply-side factors, mostly relating to the myriad aspects of marketing, the shaping of the local retail scene, and investment in pro-duction capacity and in creativity also impact consumer spending.

Over the short term supply-side variables in-clude: the introduction of a new product; the

Additionally, two variables are in the nature of regulatory tools that may be used to influ-ence household spending. These are: the level of interest rates on consumer credit, and the level of permissible household indebtedness.

Another variable pertains to consumer con-fidence as determined by household income expectations. Also impacting consumer con-fidence and expectations are non-economic factors namely, political, security, and geo-political influences.

Over the long haul, demographic change de-termines the secular growth of consumer demand.

The exogenous determinants of consumer demand may be expressed in two variables: change in the number of incoming tourists, and the level of their income and wealth.

The temporal impact of the ten main pre-dictors of consumption expenditure may be summed up as follows:

Factors that impact consumption expenditure over the short term

Consumer credit, price movements, con-sumption tax rates, consumer confidence, and the inflow of tourists.

.. a slower rate of decline can hardly be construed to indicate an impending trend reversal.


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targeting of one or more market segments through marketing or new products; produc-tion costs; advertizing and promotion.

The precepts of such a consumption model are fully compliant with mainstream con-sumption theory. To be sure, the longer the model’s time series are, the more expressive and useful will be the trend trajectory derived from the series.

At the economic policy level

In Lebanon as in most other economies, con-sumption is the largest component of GDP and change in that component is hence the weightiest determinant of change in GDP.

This established correlation has significant implications when policy-making targets GDP growth. In that perspective, the con-sumption model affords clear pointers as to the nexuses through which economic policy could influence the level and rate of change of consumption, and hence overall economic growth.

The tools of monetary policy, through their primary role in determining the margin by which the structure of local interest rates is higher than internationally prevailing rates,

exert the strongest influence on consump-tion.

On one count, interest rates and the differ-ential between local and international rates have a strong influence on household sav-ings, and hence household expenditure. That influence is two-pronged: higher interest rates render household savings more re-warding, and they raise the cost of consumer credit.

On the macro count, the higher rate differen-tial is one of the variables that account for a substantial portion of capital inflows. These inflows raise Lebanon’s Gross National Dis-posable Income (GNDI) markedly higher than GDP. High disposable income obviously fuels high consumption and explains the high ratio of consumption expenditure to GDP.

.. consumption is the largest component of GDP and change in that component is hence the weightiest determinant of change in GDP.

Mainly through taxation in all its forms, fiscal

policy has express and lasting impact on the level of consumption. Higher direct tax rates reduce disposable household incomes and hence purchasing power, whereas raising indirect taxes rates, such the Value Added Tax (VAT) rate obviously exerts negative pres-sures on household spending.

Albert Nasr

QuantAnalysts


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Of fundamentals and observables

It is indeed counterintuitive – and some might say counterfactual – to interpret retail sales indicator data as showing signs that the rate of decline in sales is decelerating.

In the “Foreword” section of the present re-port, an elaborate dissection of elemental variables in the exercise’s consumption mod-el has gone in the direction of proving that fundamentals underlying consumer demand showed no discernible improvement over the past six and a half years.

To be sure, there is no inconsistency between consumer-demand fundamentals – which remain generally unfavorable to increased consumer spending – and actual retail sales as reflected in indicator data.

Three explanatory notes are lined up to bridge the seemingly puzzling ambiguity.

First, markets – all markets – witness the phenomenon of falls petering out, especial-ly after protracted periods of decline. The decline may then be said to have “run its course”. Barring a collapse of market forc-es – a highly improbable occurrence in the current context – either a market correction

would take place or trading would occur at a flat bottom for a certain period of time await-ing a change in fundamentals.

In the case at hand, the falls in key retail markets such as clothing and fashion, luxu-ry goods, cosmetics, and sports and hobbies, have certainly ‘run their course’.

Second, in orderly markets, the fall in de-mand is finite. A downward sloping market curve approaches zero only and strictly when the market switches to collapse mode, which is not the case of these retail markets, weak as they may be at present.

Third, market weakness implies that falling demand does not build up counter-move mo-mentum to stage a rebound. Hence, and for a more or less lengthy period of time, the ‘new normal’ in trading occurs at the flat bottom of the curve, neither falling further nor re-covering.

To be sure, trading at a flat market bottom is far from being an enviable market condition to retail businesses. And whereas a nudge may be helpful over the short view, only a change in fundamentals can be factored into reasoned business planning and decisions.

INTRODUCTION


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In the issue of the report

The report has maintained its basic structure throughout its nine editions. In chapter one, the report describes the methodology followed in the building of retail performance indicators. Chapter two is dedicated to analyzing the impact of key economic variables – local, region-al, and international – on consumer spending. Chapter three presents the evolution of retail sales indicators by sector in the first half of 2019. And chapter four analyses trends based on 78-month-long time series of retail sales indicators.

The Opinion section includes an article titled “Stability undermined: Raging trade war prompts

calls for second international reserve currency” expounds on the view that trade tensions, wheth-er or not they escalate into trade wars, will fortify the case for a more stable international payments system. I. METHODOLOGY


23 22

The ninth edition of the Retail Activity Indi-cators (RAI) report covering 78 months to June 2019 followed the same methodologi-cal approach of the past eight editions for the building of indicators from raw retail sales data. The report also adopted the same trend detection procedures and analysis.

Adherence to the same data processing pro-cedure and protocol throughout the iterations of the exercise is a fundamental condition for the integrity of indicator series across the time frames covered in the nine reports.

The accuracy and reliability of the sales indi-cators stem from the fact that the underlying raw data are actually details of retail trans-actions as recorded by the retail enterprises and by payment systems operators, whereas the robustness of the indicators is a tribute to the fact that data sources cover extensive sections of retail markets.

Consistency, accuracy, and robustness are indeed the defining attributes of this much-needed gauge of retail activity that is added to the economic dashboard.

At the retail enterprise level, the expanding time series open up the technical possibili-ty of applying a correlation-based approach

to benchmarking sales performance against broader market performance indicators.

Additionally, the longer time series offer es-tablished enterprises and prospective inves-tors a data framework from which trends and forecasts may be derived and on which plans and strategies may be based.

Data sourcesThe magnitude of market coverage of data acquired from payment systems operators and from major shopping malls account for the solid and highly representative core of data from which retails sales indicators are derived.

a. Retail sales transactions through card payments

Raw data sets obtained from operators of credit/debit card payments systems repre-sent a substantial share of total retail trans-actions nationwide and are hence assigned the highest weight coefficient in the RAI re-port’s index-building protocol.

Retail transactions carried out through card payments account for such a large propor-tion of total retail transactions and for such

a broad geographical coverage that no conventional sampling procedure could possibly match their representativeness. An added advantage of data from credit/debit card payment systems is that they capture the bulk of digital retail transactions.

b. Sales data from shopping malls

Data sets on retail transactions recorded by shopping malls add to the robustness of the retail sales indicators derived from these sets due to the fact that partner malls providing the data are the country’s largest in terms of geographical coverage, footfall, tenants, and transactions.

c. The retail enterprise survey

Responses obtained from the retail enterprise survey are viewed as helpful pointers reflecting the opinion of responding retail executives.

The questionnaire is designed to achieve two objectives namely, (a) securing a precise as-sessment of the performance of retail businesses, and (b) detecting the extent to which retail executives are confident about the prospects of their activity’s performance.

The data processing protocolIn a bid to preserve the integrity of the foundational time series, the RAI report has retained the data processing protocol developed since its inception.

The nine-step statistical processing protocol runs as follows:

1. the year 2012 is retained as the base year throughout the 78-month-long series,

2. the processing procedure excludes data on categories that are not directly relevant to retail and data series that are either incomplete or discontinued.

3. with each half-year iteration of the exercise, payment card data are adjusted for change in market penetration,


25 24

4. weights are used to adjust data for size difference between data suppliers,

5. weights are used to adjust data for relative size of retail categories in the recorded transactions,

6. the seasonality indexes are re-calculated with each half-year iteration in order to obtain precise seasonally adjusted indicators,

7. trend equations are re-calculated for each six-month addition to the data sets,

8. linear as well as non-linear trend analyses are applied to the indicator data sets,

9. the time series for each category and sub-category of retail are regressed against economic variables in order to detect correlations.

Comparison of sales indicatorsRetail enterprises commonly adopt the year-to-date comparison of sales indicators to assess change in sales performance. The RAI report reproduces in table form and in chart form year-to-date as well as month-to-month comparisons, as both have complementary advantages.

The month-to-month change

• provides a measure of short-lived, non-trend-setting seasonal surges and dips in indica-tors. This comparison affords, for example, straightforward percentage expressions to the recurring “December effect”, to the “Summer rebound” pattern, and to any other atypical but significant move.

• provides the basis for measuring the median change occurring in ‘normal’, non-seasonal-ly-influenced months.

• over longer time series, it remains a valid, non-synthesized measure of change, (non-syn-thesized as distinguished from metrics obtained from de-seasonalization).

• is the internationally-prevalent approach to analyzing retail sales indicators.

Year-to-date comparisons do have the advantage of detecting seasonal influences. However, the RAI report goes a step farther on that count by de-seasonalizing indicators data for trend identification purposes.

For time units longer than a month, the quarter-to-preceding-quarter comparisons and the half-year-to-preceding-half-year comparisons also help detect seasonality patterns. These comparisons gain in relevance in instances (a) where indicators for a category or sub-category of retail do not reflect seasonal influences, or (b) where seasonal surges and dips are ironed out through averaging with other months of the quarter or half-year.


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On the local sceneFailure to reform

Trapped in the political deadlock and the grim expectations it generates, the performance of large sectors of the economy has fallen well below the level that would create the new jobs needed to fuel high rates of growth and achieve prosperity.

To be sure, the economy might post trifling rates of growth this year as the tourism sector, though performing at well below capacity and expectations, will come out comparatively better off.

An emaciated economy and overdue reforms inevitably heighten discontent. Businesses as well as households are voicing increasingly louder grievances about the supply and cost of public services and more generally about the inefficiency of the public administration and its burden on the private economy.

At the policy-making level, options are becoming too restricted to allow optimal management of the economy, whereas failures in five areas of governance have erected formidable barriers to recovery.

First, major reforms have not yet been undertaken that would lead to a leaner, less costly and more efficient government.

Second, economic recovery has not yet been placed as a strategic objective that calls for a judicious mix of monetary and fiscal measures to make it happen.

Third, reforms leading to a more competitive investment environment have yet to be undertaken.

Fourth, policies and large projects needed to achieve economic and social development have been repeatedly drawn and shelved.

Five, the process of building institutions for development, growth, and the creative economy has yet to be initiated.

Wanting governance comes at a steep cost indeed.

II. THE ECONOMIC BACKDROP


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Over the five and a half years the CPI evolved as follows:The Consumer Price Index

The Consumer Price Index (CPI) moved up 0.91 percent in the first half of 2019.

In the first quarter of 2019, the CPI was up 1.16 percent, but the second quarter of the year saw the index diminish by 0.25 percent.

On a year-to-date monthly comparison, the June 2019 CPI was 1.69 percent above its June 2018 level, the lowest year-to-date change over the past three and a half years.

2014

2015

2016

2017

2018

1st half 2019

-0.71%

-3.40%

3.14%

5.01%

3.98%

0.91%

CPI change


31 30

On the regional scenePower and pipeline politics

In the region’s energy space, power politics have not yet established a stable configura-tion for the distribution of presence, inter-ests, and radiuses of influence, though the endgame is no more than a few moves away. The inevitable emergence of Pax Rossica, and the promise of deliverance and prosperity are far from being pipe dreams. Quite the contrary, pipeline politics and networks will firmly seal the fortune and the fortunes of the region to where they belong.

On the international sceneCurrency rates

Trade wars – should it come to that – invari-ably morph into currency wars. The opening shots in such a war may have already been fired as China, the world’s largest exporter for a full decade now, has been labeled as a ‘currency manipulator’. The production and innovation behemoth has ‘earned’ that label for allowing its currency to edge slightly low-er rather than intervening to prop it up.

The US dollar’s trade-weighted index was up 1.43 percent in the first half of 2019. In the year and a half to June 2019, the dollar’s in-dex rose by 4.42 percent.

Oil prices

Oil prices continue to be caught in the pin-cers of expectations of a global economic re-cession, hence weak demand for energy on the one side, and on the other, expectations of a supply glut emerging in 2020.

On the supply side, OPEC’s production-cut-ting bids to stem over-supply are thwarted by US shale oil production. Factors mitigat-ing supply growth are mainly non-economic. These include the US embargo on oil exports from Iran and Venezuela, and recurring pro-duction and export disruptions in Libya.

The range of price fluctuations of $55 to $75 per barrel predicted in RAI’s eighth edi-tion is expected to hold in the second half of 2019, barring improbable war-induced supply disruptions. The $75 resistance level is expected to be hold as major producers have pledged to counter interruptions with increased supply.

Food prices

The food price index prepared by the Food and Agriculture Organization (FAO) was up 6.93 percent in the first half of 2019, the first marked upmove following two years of downmoves.

Over the past four and a half years, the FAO food price index changed as follows:

2015

2016

2017

2018

1st half 2019

-17.47%

11.04%

-0.70%

-4.49%

6.93%

FAO food price index change


33 32

OverviewJudging by retail sales performance as measured by the ninth edition of the Retail Activity Indi-cators (RAI) report, and given the fact that sales in the first half-year typically stage a seasonal dip, indicator data appear to be pointing to a bottoming out of the seven-year-long downtrend.

Observations that may be lined up in support of the view that retail sales’ descent rate is losing momentum include:

• A significantly milder fall in January 2019 sales in comparison with the sharp seasonal falls in retailing registered in all the months of January throughout the report’s data set.

• The indicators of both the first and second quarters of 2019 were higher than levels recorded in the same periods of the year before.

• The indicator for the first half of 2019 was less than three percent lower than that of the second half of 2018, a comparatively slight gap given the heavy and opposing seasonal influ-ences at play in the two periods of the year.

These pointers, however, are far from portending a reversal in the negative trend. A slower rate of decline does not imply that a recovery is in the making.

III- THE INDICATORS- Overview

- Monthly evolution of retail sales indicators

- Quarterly evolution of retail sales indicators

- Evolution of retail sales indicators in the first half of 2019


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January and February

The retail sales indicator for all nine cat-egories of goods and services included in the present report retreated, on a month-to-month basis, by 11.09 percent and 18.66 percent respectively in January and February 2019. That was a combined decline of 27.68 percent from the level the indicator had reached in December 2018.

March to June

In the subsequent four months, that indica-tor rose by a combined 26.7 percent from its February low. By mid-year, the indicator was 8.37 percent below its level at the end De-cember 2018.

III.A.1. Clothing and fashionThe clothing and fashion sector of retail post-ed the weakest sales performance in the first half of 2019.


The sales indicator for that sector declined by 30 percent and by 23.44 percent in Janu-ary and February respectively, that is a com-bined fall of 46.41 percent from the metric’s December 2018 level.

In February, that indicator hit a record low of

62.48 percent below its 2012 base level.

March and April

The retail sales indicator for clothing and fashion moved noticeably off its February low as it rose 19.51 percent and 16.33 percent in March and April respectively.

On a year-to-date basis, the March 2019 indi-cator for that category of retail was 19.81 per-cent lower than its March 2018 level, where-as the April 2019 indicator was 5.85 percent higher than its level in the same month of the year before.

III.A. Monthly evolution of retail sales indicators in the first half of 2019


37 36

May

The clothing and fashion retail sales indicator fell back 16.54 percent in May, and on a year-to-date basis it was down a significant 24.01 percent.

June

The month of June 2019 saw the clothing and fashion retail sales indicator move broadly up by 44.3 percent from its previous month’s level, though that indicator remained 4.22 percent below its level in the same month of 2018.

The clothing and fashion category includes the seven sub-categories of men’s wear; women’s wear;

women’s accessories; children’s wear; shoes; apparel; and fabric and sewing.

III.A.2. Food and beverages


On a month-to-month comparison, the food and beverages retail sales indicator fell by 9.43 percent and by 18.41 percent respec-tively in the first and second months of 2019.

On a year-to-date comparison, however, that indicator was markedly above its levels in the same months of 2018; it was 60.02 per-cent higher in January 2019 and 64.2 percent higher in February 2019.

March and April

On a month-to-month comparison, the retail sales indicator for food and beverages moved up by 5.26 percent and by 4.21 percent respectively in March and April 2019. In the two-month pe-riod, that indicator remained significantly higher than its level in the corresponding months of 2018. In March 2019 it was 28.78 percent higher than its level in March 2018 and in April it was 41.64 percent higher than its level in the same month of the previous year.

May and June

The retail sales indicator for food and beverages was a trifle 0.07 percent lower in May 2019 as compared to the previous month’s level and 5.98 percent lower in June 2019.

The year-to-date comparison, however, still showed a markedly higher indicator level. In May 2019, the sales indicator for food and beverages was 33.37 percent higher than its level in the same period of 2018 and in June 2019 it was 26.25 percent higher by the same comparison.

The food and beverages category comprises the five sub-categories of supermarkets; confectionery;

bakeries; various food stores; and alcoholic beverages.


39 38

III.A.3. Cosmetics

January

The retail sales indicator for cosmetics plunged 38.1 percent in January 2019 from its December 2018 level. On a year-to-date basis, that indicator was also a broad 45.91 percent lower than its January 2018 level.

In January 2019, the retail sales indicator for cosmetics fell to a dataset record low of 42.79 percent below its 2012 base year level.

February and March

The sales performance indicator for cos-metics was up in February by a narrow 2.49 percent margin compared with the previous month’s level and up in March by a wide 35.62 percent margin above the previous month’s level.

The year-to-date comparison conveys that indicator’s weakness. Thus, the February 2019 indicator for cosmetics remained 52.3 percent lower than its level in the same month of the year before, and 26.55 percent lower than its year-to-date level.

April

The April 2019 retail sales indicator for cos-metics was 2.96 percent lower than its level in the previous month and 22.92 percent low-er than its year-ago level.

May and June

On a month-to-month basis, the sales indi-cator for cosmetics moved up in by 8.46 per-cent and by 7.85 percent respectively in May and June 2019.

The year-to-date comparison, however, showed a decline of 37.05 percent and 27.29 percent respectively in the May and June 2019 indicators from their levels in the same months of the previous year.

The cosmetics category of retail includes three

sub-categories namely; perfumes, cosmetics,

and personal care products.


41 40

III.A.4. Household goods

January to March

The retail sales indicator for household goods was down in each of the first quarter’s three months. On a month-to-month basis, that in-dicator fell by 28.13 percent, by 7.29 percent, and by 4.74 percent respectively in January, February and March 2019.

The year-to-date comparison relayed more mixed moves. Thus, in January and Febru-ary 2019 the indicators for household goods sales was up respectively 13.08 percent and 12.03 percent from their level in the same months of the previous year. In March, that indicator was 18.53 percent lower than the level it had reached a year ago.

April and May

The household goods sales indicator was up 12.89 percent in April and up 21.28 percent in May 2019 on a month-to-month comparison.

The year-to-date comparison also showed the April and May 2019 up respectively by 8.97 percent and by 16.01 percent from their year-ago levels.

June

The June 2019 indicator for sales of house-hold goods edged down 1.85 percent from its previous month’s level, and was up a modest 1.59 percent from its level in the same month of the previous year.

Items grouped under the household goods cat-

egory of retail fall under the following eleven

sub-categories: sanitary; glass, paint, and wall-

paper; hardware; furniture; floor covering; drap-

ery and upholstery; various home furnishing;

household appliances; audio-visual; antiques

restoration; and crystal and glassware.


43 42

III.A.5. Luxury goods


The retail sales indicator for luxury goods fell by a sharp 45.87 percent in January 2019 from its previous month’s level, and extended the fall in February when it was 12.68 percent lower than it’s level the month before.

In February 2019 the retail sales indicator for luxury goods reached a record low of 62.86 percent below its 2012 base year level.

The year-to-date comparison also showed that indicator weakening by 4.55 percent and by 3.23 percent respectively in January and February 2019.

March

The retail sales indicator for luxury goods rebounded in March 2019 as it rose by 18.57 percent from its previous month’s level, but was still 9.19 percent lower than its level in the same month of the previous year.

April

In April 2019, the sales indicator for luxury goods was down by a moderate 3.12 percent from its previous month’s level, but up 8.81 percent from its April 2018 level.

May and June

The months of May and June 2019 witnessed a moderate rebound in the sales indicators for luxury goods. The May indicator was up 11.4 percent from its April 2019 level and the June indicator extended the rise by 10.36 percent from the May level.

On a year-to-date comparison, the luxu-ry goods sales indicators for May and June 2019 were respectively 12.02 percent and 14.73 percent higher than their correspond-ing months in 2018.

Seven sub-categories are included in the luxury

items category of consumer goods;

these are: jewelry, watches, and silverware;

crafts; art dealers galleries; florists; cigars;

gifts; and electronics.


45 44

III.A.6. Sports and hobbies goods


In January 2019, the retails sales indicator for sports and hobbies goods plunged 51.64 percent below its level in the previous month and was practically unchanged from its lev-el in the same month of the previous year at +0.02 percent.

That indicator extended its fall in February 2019 as it was 15.64 percent lower than its previous month’s level. On a year-to-date comparison, the indicator was 4.08 percent lower than its level in the same period of the previous year.

March and April

The sales indicator for sports and hobbies goods rose by a moderate 5.48 percent in March 2019 and by 2.08 percent in April as compared to the previous months. Compared to their level in the same months of 2018, the indicators for sports and hobbies goods were 0.2 percent lower and 1.44 percent higher re-spectively in March and April 2019.

May

In May 2019, the sales indicator for sports and hobbies was 15.49 percent lower than its previ-ous month’s level and 9.18 percent lower than its year-ago level.

In May 2019 the retail sales indicator for sports and hobbies goods reached a record low of 58.03 percent below its 2012 base year level.

June

The retail sales indicator for sports and hobbies bounced back in June 2019 as it moved up 19.04 percent above its previous month’s level. On a year-to-date basis, that indicator remained 11.21 percent lower than its level in the same month of the previous year,

The sports and hobbies category represents three sub-categories of consumer goods: sporting

goods; games and toys; and music instruments.


47 46

III.A.7. Hospitality services

January

The retail sales indicator for hospitality ser-vices was up 6.32 percent in January 2019 from its level in the previous month, and it was up a broad 53.71 percent from its level in the same month of 2018.

February

In February 2019, the sales indicator for hos-pitality services was down 7.3 percent from its previous month’s level and down 17.84 percent from its level in the same month of 2018.

March and April

The retail sales indicator for hospitality ser-vices rose by 7.66 percent in March 2019 from its level in the previous month; that indicator was 51.34 percent higher than its level in the same month of 2018.

In April, the hospitality services sales indica-tor advanced by 19.76 percent in comparison with its March 2019 level; that indicator was a whopping 71.77 percent higher than its year-ago level.

May

The retail sales indicator for hospitality ser-vices retreated by 8.84 percent in May 2019 from its April 2019 level. On a year-to-date comparison, however, that indicator re-mained a broad 48.29 percent above its May 2018 level.

June

In June 2019, the sales indicator for hospital-ity services staged a broad advance of 43.55 percent from its previous month’s level and was 59.81 percent higher than its June 2018 level.

In June 2019, the sales indicator for hospital-ity services rose to a record high of 77.32 per-cent above its 2012 base year level.

Hospitality related services include four

sub-categories: catering; restaurants; pubs and

nightclubs; and hotels and resorts.


49 48

III.A.8. Tourism services

January

In January 2019, the retail sales indicator for tourism services more than doubled in com-parison with its December 2018 level; that in-dicator moved up 105.43 percent on a month-to-month basis and stood 53.71 higher than its year-to-date level.

February

In February 2019, the sales indicator for tour-ism services dipped 39.65 percent below its previous month’s level and 17.84 percent below its level in the same period of the previous year.

March

The sales indicator for tourism services moved up 5.26 percent in March 2016 com-pared to its previous month’s level, but was down 8.76 percent from its level in the corre-sponding month of the previous year.

April to June

The retails sales indicator for tourism ser-vices fell in each of the three months of the second quarter of 2019. On a month-to-month basis, it was down 0.45 percent, 7.45 percent and 1.83 percent respectively in April, May and June.

On a year-to-date comparison, the April 2019 indicator was 9.49 percent higher than its April 2018 level. However, the May and June indicators were 3.77 percent and 11.76 percent lower than their levels in the corre-sponding months of 2018.

The tourism category of retail includes six

sub-categories; these are: travel agencies; trav-

el services; movies and theaters; dance halls

and studios; tourist attractions; and clubs.


51 50

III.A.9. Medical services

January

The retail sales indicator for medical services edged moderately upwards by 1.38 percent in January 2019 from its level in the preceding month. Compared with its January 2018 lev-el, that indicator was 1.73 percent higher.

February

In February 2019, the sales indicator for med-ical services declined by 20.55 percent from its level in the preceding month, but was up 2.68 percent from its level in the same month of the previous year.

March

The sales indicator for medical services moved up 16.84 percent in March 2019 com-pared to its level in the preceding month. That indicator, however, was 9.45 percent lower than its March 2018 level.

April

The April 2019 sales indicator for medical services edged slightly lower; it retreated by 2.47 percent from its level in the preceding month, but was up 3.4 percent from its level in the same month of 2018.

May

In May 2019, the medical services sales indi-cator moved up again by 10.16 percent from its level in the preceding month, and was marginally down by 0.78 percent from its year-ago level.

June

In June 2019, the medical services sales in-dicator was down by a moderate 3.59 percent from its level in the preceding month, and down 9.37 percent from its year-to-date level.

The medical services category includes five

sub-categories. These are the services of: doc-

tors; dentists; optometrists and ophthalmolo-

gists; hospitals; and other health and medical

facilities.


53 52

The sales indicator for all nine retail categories

Q1-2019

The sales indicator for all nine retail catego-ries covered in the report was down a mar-ginal 3.1 percent in the first quarter of 2019 compared with its level in the fourth quarter of 2018.

On a year-to-date basis, the first quarter 2019 indicator was 3.58 percent higher than its level in the corresponding quarter of 2018.

Q2-2019

In the second quarter of 2019, the overall re-tail sales indicator was up 7.62 percent from its level in the preceding quarter and up 7.37 percent from its level in the same quarter of the previous year.

III.B.1. Clothing and fashionQ1-2019

The retail sales indicator for clothing and fashion fell by 17.44 percent in the first quar-ter of 2019 compared with its level in the pre-ceding quarter. That indicator was also down 18.84 percent from its level in the same quar-ter of the preceding year.

In the first quarter of 2019, the sales indicator for clothing and fashion dipped to a dataset low of 56.21 percent below the 2012 base year level.

Q2-2019

The sales indicator for clothing and fashion staged a sturdy recovery in the second quarter of 2019 as it moved up by 20.67 percent from its preceding quarter’s level. That indicator, however, remained 7.93 percent lower than its level in the same quarter of the preceding year.

III.B.2. Food and beveragesQ1-2019

The food and beverages retail sales indicator for the first quarter of 2019 was up a margin-al 1.83 percent from its level in the preceding quarter. That indicator stood at a broad 49.54 percent above its level in the first quarter of the preceding year.

In the first quarter of 2019, the food and bev-erages indicator rose to a dataset high of 72.79 percent above the 2012 base year level.

Q2-2019

In the second quarter of 2019, the sales indi-cator for food and beverages edged slightly lower by 1.67 percent compared to its previ-ous quarter’s level, but it remained by a broad 33.61 percent higher than its level in the same quarter of the previous year.

III.B. Quarterly evolution of retail sales indicators in the first half of 2019


55 54

III.B.3. Cosmetics Q1-2019

The retail sales indicator for cosmetics fell by 10.23 percent in the first quarter of 2019 as compared with its level in the preceding quarter. That indicator stood at a broad 42.02 percent below its level in the same quarter of 2018.

Q2-2019

The cosmetics retail sales indicator rebound-ed in the second quarter of 2019, as it moved up 28.54 percent from its previous quarter’s level. That indicator, however, remained 29.7 percent below its level in the same quarter of the previous year.

III.B.4. Household goodsQ1-2019

In the first quarter of 2019, the retail sales indicator for household goods took a sharp turn downwards as it fell by 25.07 percent from its previous quarter’s level. That indica-tor, however, remained a trifling 0.51 percent higher than its level in the same quarter of the previous year.

Q2-2019

In the second quarter of 2019, the sales indi-cator for household goods recovered notice-ably as it rose by 20.73 percent from its pre-vious quarter’s level. Compared with its level in the same quarter of the previous year, the Q2-2019 indicator for household goods sales was 8.56 percent higher.

III.B.5. Luxury goodsQ1-2019

The retail sales indicator for luxury goods took a sharp turn down in the first quarter of 2019 as it retreated by 23.59 percent from its previous quarter’s level. In Q1-2019, that indicator was 5.88 percent lower than its Q1-2018 level.

In the first quarter of 2019, the sales indicator for luxury goods hit a dataset low of 58.76 per-cent below the base year level.

Q2-2019

The luxury goods retail sales indicator moved up 15.31 percent in the second quarter of 2019 compared to its preceding quarter’s lev-el. That indicator was 12 percent higher than its level in the same period of 2018.

III.B.6. Sports and hobbies goodsQ1-2019

The sports and hobbies goods retail sales indicator dipped sharply in the first quarter of 2019; it fell 33.29 percent lower than its preceding quarter’s level and was 1.35 per-cent lower than its level in the same period of 2018.

Q2-2019

The sales indicator for sports and hobbies goods extended its fall in the second quar-ter of 2019; it was down 5.26 percent from its preceding quarter’s level and 6.5 percent lower than its level in the same quarter of the previous year.


57 56

III.B.7. Hospitality servicesQ1-2019

The retail sales indicator for hospitality ser-vices recorded a sturdy performance in the first quarter of 2019. That indicator increased by a broad 35.03 percent compared with its preced-ing quarter’s level and was 30.3 percent higher than its level in the same quarter of 2018.

Q2-2019

The sales indicator for hospitality services prolonged its strong performance into the second quarter of 2019. That indicator rose 31.58 percent from its preceding quarter’s level and stood at a whopping 59.75 percent above its Q2-2018 level.

In the second quarter of 2019, the sales indi-cator for hospitality services reached a dataset high of 45.45 percent above the 2012 base level.

II.B.8. Tourism servicesQ1-2019

The retail sales indicator for tourism services shot up 45.82 percent in the first quarter of 2019 from its preceding quarter’s level and was 7.57 percent higher than its level in the corresponding quarter of 2018.

Q2-2019

In the second quarter of 2019, the sales in-dicator for tourism services shed some of its Q1-2019 gains; it moved down 19.95 percent from its preceding quarter’s level and was 2.43 percent lower than its Q2-2018 level.

III.B.9. Medical services Q1-2019

The retail sales indicator for medical services was down 11.72 percent in the first quarter of 2019 from its level in the preceding quarter. That indicator was 2.13 percent lower than its Q1-2018 level.

Q2-2019

The sales indicator for medical services rose by a moderate 5.2 percent in the second quarter of 2019 compared to its level in Q1-2019, but remained 2.63 percent lower than its level in Q2-2018.


59 58

III.C. Evolution of retail sales indicators in the first half of 2019 In the first half of 2019, the retail sales indicator for the report’s nine categories of goods and services edged slightly lower from its level in the preceding half-year. It was down 2.62 percent from its H2-2018 level, but 5.51 percent higher than its H1-2018 level.

That indicator remained 8.36 percent below its 2012 base year level.

III.C.1. Clothing and fashion The retail sales indicator for clothing and fashion was down 7.06 percent in the first half of 2019 compared with its level in the preceding half year, and its was 13.22 per-cent lower than its H1-2018 level.

In the first half of 2019, the sales indicator for

clothing and fashion fell to a dataset low of

51.59 percent below the 2012 base year level.

III.C.2. Food and beveragesIn the first half of 2019, the retail sales in-dicator for food and beverages was up 11.06 percent from its level in H2-2018 and 41.19 percent higher than its level in H1-2018.

In the first half of 2019, the retail sales indicator

for food and beverages rose to a dataset high

of 71.34 percent above the 2012 base year level.

III.C.3. CosmeticsThe retail sales indicator for cosmetics was down a broad 27.17 percent in the first half of 2019 from its level in the preceding half year and it stood 35.68 percent lower than its level in the same period of 2018.

III.C.4. Household goodsIn the first half of 2019, the retail sales indi-cator for household decreased by 13.06 per-cent compared with its preceding half-year level. That indicator was 4.76 percent above its H1-2018 level.

III.C.5. Luxury goodsThe retail sales indicator for luxury goods was down 10.79 percent in the first half of 2019 compared with its level in H2-2018, but that indicator remained 2.92 percent higher than its H1-2018 level.


61 60

III.C.6. Sports and hobbies goodsThe retail sales indicator for sports and hob-bies goods fell by a broad 23.63 percent in the first half of 2019 from its level in the preced-ing half year and was 3.93 percent lower than its level in the first half year of 2018.

III.C.7. Hospitality servicesHospitality services saw their retail sales in-dicator rise sharply in the first half of 2019. Compared with its level in the preceding half year, that indicator mover 28.57 percent higher. That indicator was 45.4 percent high-er than its level in the same period of 2018.

In the first half of 2019, the retail sales indi-cator for hospitality services rose to a data-set high of 27.99 percent above the 2012 base year level.

III.C.8. Tourism servicesThe retail sales indicator for tourism services rose by 11.51 percent in the first half year of 2019 from its preceding half-year level and stood 2.88 percent above its H1-2018 level.

III.C.9. Medical servicesIn the first half of 2019, the medical services retail sales indicator was down 10.41 percent from its level in the second half of 2018 and it was 2.39 percent below its level in the first half of 2018.


63 62

- 51

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+71.

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+40.

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+27.

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+2.0

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- 32

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- 25

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- 51

.49%

- 55

.6%

- 8.

36%

HOUS

EHOL

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MEDICAL SERVICES

SPOR

TS A

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HOBB

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GOOD

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LUXU

RY G

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TOURISM

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HOSPIOTALITY SERVICES

ALL

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TEGO

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COSM

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S

FOOD & BEVERAGES

CLOT

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64.00

44.00

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-56.00

Retail sales indicators in the first half of 2019

in relation to 2012 base year level

IV. THE ANALYSIS- Seasonally adjusted retail sales indicators

- Trend analysis

- The moving average approach


65 64

IV.A. Seasonally adjusted retail sales indicators

De-seasonalization of retail sales indicators generates time series that do not embody short-lived seasonal influences. The purpose of seasonal adjustment of indicator numbers is hence to lay bare the underlying trend along which the indicators fluctuate.

The degree of added accuracy of the trend metrics derived from de-seasonalized data hinges upon the extent to which the range of fluctuations of these data is narrower than that of the unadjusted data. The axiom is that a narrower range of fluctuations begets more accurate trend parameters.

The overall retail sales indicatorThe seasonal adjustment of the 78-point in-dicator data for all nine categories of retail sales covered by the report narrowed the range of fluctuations of the adjusted set by 53.42 percent compared to that of the unad-justed set.

The standard deviation of the adjusted series was hence reduced to 5.69 compared with 13.35 for the unadjusted series.

IV. A. 1. Clothing and fashionThe seasonally adjusted 78-point data set for the clothing and fashion retail sales indicator narrowed the range of fluctuations by 39.37 percent compared with the range of fluctua-tions of the unadjusted set. The standard de-viation after seasonal adjustment was 10.57 compared with a standard deviation of 14.54 for the unadjusted indicator data set.

IV. A. 2. Food and beveragesThe seasonal adjustment of the 78-month retail sales indicator data for food and bever-ages resulted in the reduction of the de-sea-sonalized data set’s range of fluctuations by 10.01 percent compared to that of the unad-justed data set.

The seasonally adjsuted set’s standard de-viation was at 34.2 percent compared with 35.62 for the unadjusted set.

Sales indicator for nine goods & servicesand seasonally adjusted indicator

Sales indicator for clothing & fashionand seasonally adjusted indicator

Sales indicator for food & beveragesand seasonally adjusted indicator


67 66

IV. A. 3. CosmeticsThe unadjusted retail sales indicator data for cosmetics recurrently recorded the broadest fluctuations of the nine categories of retail included in the report. Furthermore, these wide fluctuations have not followed a detect-able seasonal pattern. The seasonal adjust-ment of the 78-month data set reduced the range of fluctuations by 11.96 percent com-pared with the range of fluctuations for the unadjusted set.

The adjusted set’s standard deviation was re-treated to 23.06 from 29.94 for the unadjust-ed series.

IV. A. 4. Household goodsThe range of fluctuations for the household goods retail sales indicator data narrowed by 55.01 percent as a result of de-seasonaliza-tion.

The adjusted data set’s standard deviation declined to 5.30 compared with 11.93 for the unadjusted set.

IV. A. 5. Luxury goods The seasonally adjusted data set for the lux-ury goods retail sales indicator exhibited marked seasonal peaks interspersed with interval of relatively tight fluctuations. By ironing out periodic peaks, the range of fluc-tuations of the seasonally adjusted data set was reduced by 68.95 percent.

The standard deviation for the adjusted data set was reduced to 7.4 from 16.71 for the un-adjusted set.

IV. A. 6. Sports and hobbies goods Also exhbiting a strong seasonality pattern of sharp seasonal peaks interspersed with tight fluctuations at markedly lower levels, the sports and hobbies goods 78-point indicator data saw the range of fluctuations brought about by de-seasonalization narrow down by 73.85 percent, the largest fluctuation abate-ment among the report’s categories of con-sumer goods and services.

The standard deviation metric of the season-ally adjusted set was reduced to 5.37 from 21.57 for the unadjsuted series, also the largest reduction in this metric.

Sales indicator for cosmeticsand seasonally adjusted indicator

Sales indicator for household goodsand seasonally adjusted indicator

Sales indicator for luxury goodsand seasonally adjusted indicator

Sales indicator for sports & hobbies goods and seasonally

adjusted indicator


69 68

IV. A. 7. Hospitality servicesThe de-seasonalized retail sales indica-tor data has confirmed the near-flat trend formed over the six years to 2018 followed by a surge in the first half of 2019.

As a result of de-seasonalization, the range of fluctuations of adjusted indicator data was 31.54 percent narrower than that of unad-justed data.

The standard deviation of the adjusted series was consequently reduced to 15.1 from 26.01 for the unadjusted series.

IV. A. 8. Tourism servicesThe retail sales indicator for tourism ser-vices exhibited comparatively patternless and broad fluctuations in the 2013-2015 por-tion of the data set followed by a near-order-ly slide thereafter. The de-seasonalization of the 78-point indicator data therefore reduced the range of fluctuations by a moderate 12.9 percent.

The standard deviation of the adjusted data retreated to 18.99 from 24.87 compared with

that of the unadjusted data.

IV. A. 9. Medical servicesWith comparatively subdued fluctuations of primary indicator data, the seasonal adjust-ment of the retail sales indicator series for medical services reduced the range of fluc-tuations by a moderate 19.84 percent.

The standard deviation for the adjusted data of that indicator series registered a moder-ate decline to 14.65 from 16.93 for the unad-justed series.

Sales indicator for hospitality servicesand seasonally adjusted indicator

Sales indicator for tourism servicesand seasonally adjusted indicator

Sales indicator for medical services and seasonally

adjusted indicator


71 70

IV. B. Trend analysisThe statistical exercise bases trend metrics and analysis on the de-seasonalized data sets reproduced in the preceding section of the current chapter.

The trend formed by the 78-month seasonally adjusted indicator time series is expressed both in linear and in non-parametric terms. The linear trend approach relays the evolution of data through time in basically one numerical parameter namely, the slope.

The advantage of this approach becomes evident when it is applied to a multitude of time se-ries, an instance that calls for a comparison or ranking of linear trends. This is the case in the present exercise where the linear trends of the nine categories of retail are ranked according to both vector direction and gradient.

The non-parametric regression chosen for the present exercise is the locally weighted fit ap-proach, which has three advantages over the linear trend approach. First, it captures the sta-tistically significant pivot points that mark changes in vector direction within the datasets; second, longer time series often embody change in vector direction which the stylized linear approximation of the trend is not designed to reflect; and third, the stages of data evolution, which the locally weighted fit renders more noticeable, supply additional information and ma-terial for analysis.

The overall retail sales indicatorThe linear trend line for the 78-point seasonally adjusted indicator data set for all nine cate-gories of consumer goods and services took a turn upwards as it traced a steeper gradient of +0.155 compared with a gradient of +0.132 for the 72-point indicator data. However, the slopes for the 66-point data and the 60-point data sets were steeper at +0.163 and +0.165 respectively.

The locally weighted fit for the seasonally adjusted overall retail sales indicator conveys three distinct phases. The first exhibits a perceptible uptrend covering the first 24-month series, the second phase traces a marked gradient decline in the 48 months that followed, and the third phase covers the first half of 2019 and shows a resumption of the uptrend.


73 72

IV. B. 1. Negatively sloped linear trend for sales indicators of three retail categories

Clothing and fashion

The seasonally adjusted retail sales indi-cators for the clothing and fashion traced a steadily negative trend throughout the 78-month data series of the report.

The linear trend line has been on a steadi-ly steeper decline over the data set, with the negative slope reaching -0.416 for the 78-month data set, compared with a slope of -0.394 for the 72-month data, a slope of -0.341 for the 66-month data, and a slope of -0.314 for the 60-month data.

Tourism services

The overall trend for retail sales performance of tourism services remained negative, though the 78-month downward slope was at -0.225 milder than the 72-month trend line gradient of -0.257.

The locally weighted fit for the tourism ser-vices indicator data shows an upward move in the first 30 months of the data set followed by a relatively steady though gradually soft-ening decline thereafter.

Luxury goods

The linear trend expressing the 78-month seasonally adjusted retail sales indicator data for luxury goods traces a gradually sharper decline that sloped at

-0.217 compared with a gradient of -0.215 for the 72-month data set’s trend line, -0.190 for the 66-month data set, and -0.132 for the 60-month set.

The locally weighted fit reflects a sharp down-turn over the past three and a half years.


75 74

Food and beverages

The positive linear trend for the food and bev-erages retail sales indicator data remained the steepest among the trend lines of the re-port’s six categories of retail that exhibited a positive trend.

The slope for the food and beverages 78-month data set trendline rose steeply to +1.35 from +1.07 for the 72-month data set, +0.926 for the 66-point set, and +0.765 for the 60-month data set.

The locally weighted fit depicts the sustained steepening of the uptrend.

Medical services

The linear uptrend of the de-seasonalized 78-month indicator data set for sales of medical services grew milder with a slope of +0.460 from a slope of +0.493 for the 72-month data set, +0.514 for the 66-month set, and +0.502 for the 60-month set.

The locally weighted fit for the medical ser-vices sales performance indicator’s series

conveys the facts that the trend line pointed resolutely up with no change in direction at any point in time, and that all indicator fluc-tuations as well as the trend line remained above the base year’s level throughout the report’s 78-month period.

Hospitality services

The de-seasonalized 78-month indicator data set for sales of hospitality services traced a steeper linear trend line with a gradient of +0.239 compared with a gradient of +0.0234 for the 72-point data set, +0.0876 for the 66-point set and +0.141 for the 60-point set.

The locally weighted fit shows the steep up-turn of the first half of 2019.

Cosmetics

The linear trend line depicting the 78-point seasonally adjusted indicator data set for cos-metics retail sales recorded a rapid deceler-ation in the overall upmove due to the sharp inflection point in 2018 that marked a steep de-cline. Thus, the trend line sloped up at +0.109, markedly down from gradients of +0.351 for the 72-month set, +0.584 for the 66-month set, and +0.602 for the 60-month set.

The locally weighted fit shows a marked downturn over the past year and a half.

IV. B. 2. Positively sloped linear trend for sales indicators of six retail categories


77 76

Sports and hobbies goods

The linear uptrend formed by the 78-month seasonally adjusted retail sales indicator data for sports and hobbies goods registered a decline in its slope to +0.0802, from +0.126 for the 72-month data set, +0.174 for the 66-month set and +0.247 for the 60-month set.

The locally weighted fit, which remained positively sloped throughout the five years to 2016, showed a resolute decline over the past two and a half years.

Household goods

The linear trend for the 78-month retail sales indicator data for household goods changed direction from a mild downward slope to a mild upward slope. The trend line’s gradi-ent was +0.00398 compared with a slope of -0.032 for the 72-month data set, -0.0697 for the 66-month set, and -0.118 for the 60-month set.

The locally weighted fit showed a more nu-anced view of the evolution of this data set, with a mild upturn after 2016 preceded by a relatively sharp three-year-long decline.

LINEAR SLOPE FOR SEASONALLY ADJUSTED SERIES

78-month dataset 72-month dataset 66-month dataset

All nine categories Y = 82.5 + 0.155t Y = 83.5 + 0.132t Y = 82.5 + 0.163t

Positively-sloped linear trend

Food & beverages Y = 46.2 + 1.35t Y = 53.9 + 1.07t Y = 57.4 + 0.926t

Medical services Y = 118 + 0.460t Y = 118. + 0.493t Y = 117 + 0.514t

Hospitality services Y = 91.2 + 0.239t Y = 97.3 + 0.0234t Y = 95.2 + 0.0876t

Cosmetics Y = 102 + 0.109t Y = 96.6 + 0.351t Y = 91.2 + 0.584t

Sports & hobbies goods Y = 54.7 + 0.0802t Y = 54.1 + 0.126t Y = 52.6 + 0.174t

Household goods Y = 68.3 + 0.00398t Y = 69.8 - 0.0324t Y = 70.0 - 0.0697t

Negatively-sloped linear trend

Clothing & fashion Y = 84.0 - 0.416t Y = 83.6 - 0.394t Y = 81.8 - 0.341t

Tourism services Y = 114 - 0.225t Y = 114. - 0.257t Y = 113 - 0.217t

Luxury goods Y = 64.3 - 0.217t Y = 64.6 - 0.215t Y = 63.5 - 0.190t


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IV. C. The moving average approach

To further validate the trend analysis, a two-step process was worked out that requires the expression of primary indicator data in the form of 12-month moving average.

The retail sales data of only three of the nine retail catego-ries included in the report exhib-ited good-fit linear trend lines. These categories are: clothing and fashion, food and beverages, and medical services.

The 78-point indicator data sets of six other retail categories are better expressed by non-linear parametric trend lines, namely the quadratic fit.

The purpose of trend analysis is intended to provide pointers for projections.

The overall retail sales indicatorThe non-linear trend line formed by the mov-ing average metrics drawn from primary re-tail sales indicator data for all nine categories of goods and services shows a clear weaken-ing of retail performance in 2018, followed by a upmove in the first half of 2019, which is not yet reflected in the stylized expression of the data set.

IV. C. 1. Clothing and fashionThe linear trend expressing the moving average metrics derived from primary retail sales indica-tor data for clothing and fashion remained firmly negative with a slope of -0.407 for the 66-point moving average set, compared with a slope of

-0.362 for the 60-point moving average set.

IV. C. 2. Food and bever-ages The linear trend depicting the moving average numbers ob-tained from primary retail sales indicator data for food and bev-erages remained strongly pos-itive with a slope of +0.124 for the 66-point moving average set, up from a slope of +102 for the 60-point set.


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IV. C. 3. CosmeticsThe non-linear trend describing the moving average values ob-tained from the primary retail sales indicator data for cosmet-ics shows a clear turn down-wards over the past 12 months.

IV. C. 4. Household goodsThe non-linear trend line for the moving average metrics drawn from the primary retail sales in-dicator data for household goods traces an upturn over the past two and a half years.

IV. C. 5. Luxury goodsThe non-linear trend line ob-tained from the moving average metrics derived from the pri-mary retail sales indicator data for luxury goods shows a sharp decline over the past three and a half years.

IV. C. 6. Sports and hob-bies goods The non-linear trend line for the moving average values obtained from primary retail sales indica-tor data for sports and hobbies goods showed a decline over the past two and a half years.


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IV. C. 7. Hospitality ser-vicesThe non-linear trend line for the moving average metrics ob-tained from the primary retail sales indicator data for hospi-tality services may constitute an acceptable approximation of the chart line and its many inflection points.

IV. C. 8. Tourism servicesThe non-linear trend line de-rived from the moving average numbers obtained from the pri-mary retail sales indicator data for tourism services showed a steady decline of the sales per-formance indicator for that sec-tor from mid 2015 to 2017, fol-lowed by a moderate upturn in the past year and a half.

IV. C. 9. Medical servicesThe linear trend line formed by the moving average metrics drawn from the primary retail sales indicator data for medical services remained strongly pos-itive throughout the period cov-ered by the report. That line piv-oted to a milder slope of +0.482 for the 66-point moving average set, from +0.505 for the 60-point

set.


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CONCLUDING NOTESThe ninth edition of the Retail Activity Indicators report included of indictor and trend metrics that may be viewed a signaling the end of a six-year downtrend.

Comparatively milder rates of decline in a period of the year that normally witnesses markedly weaker retail sales, the two quarters constituting the first half of 2019 posted higher indicators than year-ago corresponding periods, and an overall seasonally adjusted trend line that seems to be building an ascending path, are indeed positive signs.

Still, negative signs are also there. Four sectors of retail have seen their monthly sales indicators hit a dataset low during the first half of 2019 and their trend metrics are still firmly negative.

The fact that signs were mixed rather than mostly negative, favors the view that the six-year decline may run its course. However, a slowdown in the rate of fall, or eventually the end of the downtrend, is not an occurrence that necessarily portends recovery.

Barring economic change that prop up household spending through the three fundamental en-ablers of recovery namely, higher private investment, higher employment, and higher house-hold disposable incomes, retail activity could be in for a period where consumer spending would languish at or near the current lows.

The Retail Observatory at the Lebanese Franchise Association (LFA) was established to meet two objectives. One relates to facilitating advocacy on behalf of the industry as a whole, a task carried out resourcefully by LFA.

The other objective involves supporting retail enterprises gain quantitative insight into the in-dustry’s performance. This is done through offering enterprises planning-grade indicator data that are processable and modelizable to enable benchmarking and projections.

OPINION Stability undermined

Raging trade war prompts calls for second international reserve currency

Albert Nasr

For more than a year now, the international trade scene has been gripped by heightened concern over an apparent US yen to engage in trade war with two of its main trading partners. Retaliatory measures stoked fears of an escalation that could disrupt global trade exchange as well as glob-al supply chain linkages, and more ominously, undermine the global financial system.

What began as an aggressive negotiating stance developed into injurious opening shots that can only presage a looming trade war.

Questioning the efficacy of global financial management

While the disruption of international trade is still in the making and could be reversed, it has surely served a warning that, eleven years after the global financial meltdown, the mod-el of international financial management has not yet fully recovered. That this model has retained credibility despite visible and deep stress cracks is indeed a feat in credulity on the part of those countries that prop it up, will-ingly or out of financial expediency.

.. eleven years after the global financial meltdown, the model of international financial management has not yet fully recovered.


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To be sure, the efficiency and superiority of market-based economic organization is not ques-tioned here, nor is its survival at stake, for the time being. But doubtful is the ability of the financial superstructure to field efficiently and smoothly the growing volume of financial re-sources arising from the growth of global trade and investment flows.

In its essence, one important facet of the global trade and payments situation may be pic-tured as follows: Keen on exporting mainly to one large consuming country, the world’s larger producers aspire to get paid in the currency of that country only to re-channel most of these payments to that same country. Hence, the larger these payments are the more financial re-sources would be placed at the disposal of the consuming country. These resources naturally fuel excesses in credit expansion that in turn finance excessive demand for imports. The cycle is explosive rather than self-corrective. Admittedly, the picture needs further development as it may appear basic at first glance.

The United States has been running trade deficits averaging $750 billion over the past decade. These deficits are mirrored as surpluses favoring large exporting countries. Part of these trade

surpluses are used to finance spending on development in recipient countries, but a substantial portion remains in the form of liquid reserves that are sent back to the US for ‘safe keeping’ in the form of gov-ernment debt instruments. The return flow quite conveniently helps the US Treasury finance a large, trillion-dollar-and-growing budget deficit at a relatively low cost. Speak of a double coincidence of needs!

Approximately the same sketch could be drawn for most large oil exporting coun-tries and the sizeable reserves they have

accumulated as a result of a four-year stretch of high oil prices.

The inordinate growth of international financial reserves from these two sources – the twin defi-cits in the US and high oil prices – has created what was aptly described as ‘a global savings glut’, read ‘a global lending glut’, which evidently caused interest rates to fall. With worldwide inflation tightly bridled and with inflation expectations duly smothered, long-term real rates of interest took a sustained descending path.

In theory, falling long-term real rates of in-terest normally encourage investment in real assets, particularly if monetary policy accen-tuates that trend. In the current context, fall-ing rates and a policy of easy credit combined to constitute the most direct and fundamental cause of the real estate bubble, a bubble that could have burst with controllable damage had banking and finance been more regulated, more closely supervised and better governed than they were in the US mainly, but also else-where in the world.

Censure was dispensed in so many directions and at so many levels as to make most residents of the planet suffer from a nagging culpability complex for having contributed, however mod-estly and remotely, to the emergence of the crisis.

There are accusations that giving free reins to consumerism in developed economies has fed into the mercantilist mindset prevailing in large emerging economies. The latter have amassed financial reserves large enough to could potentially swamp the international financial system if they were to keep growing over a protracted period of time. Pressure from these reserves is already impacting real rates of interest, which are approaching zero, or may have gone into negative territory, depending on what measure of inflation one assumes.

Part of these trade surpluses are used to finance spending on development in recipient countries, but a substantial portion remains in the form of liquid reserves that are sent back to the US for ‘safe keeping’ in the form of government debt instruments.

There are accusations that giving free reins to consumerism in developed economies has fed into the mercantilist mindset prevailing in large emerging economies.


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If this were an acceptable diagnosis, what remedy would be needed?

The wish list in that respect keeps getting longer and the undertone of blame leveled at export-ing countries keeps getting blunter:

• If only large exporting nations would tone down their successes.

• If only they would stop being so anachronistically mercantilist and spend rather than accu-mulate the dollars they are getting in payment for their exports.

• If only they would speed up (further!) the development of their economies and hence boost local demand for the goods and services they produce.

• If only they would allow their currencies to ap-preciate in response, and in proportion, to their trade surpluses, and thus price their products so high as to discourage consumerism elsewhere.

Peculiar as they may seem when formulated in those plain terms, these prescriptions indeed make up the pillars of the trade policy of the world’s largest economy toward the world’s fastest growing exporter.

Symptoms and root causes

Trade imbalances are symptoms of de-industrialization, whereas the root causes of current worldwide financial woes lie elsewhere. A basic root cause analysis indicates that the global fi-nancial predicament is better viewed not from a trade perspective but from an adjoining angle.

The single international reserve currency confers unbridled financial, economic and certainly political power to the country issuing that currency. A goodly number of sanctions clamped

down on countries and even on individuals derive from that power and its perquisites.

The ‘rest of the world’ accepted – some say endured – that power when the international finan-cial system maintained a semblance of stability and when that power was commensurate with the absolute economic might of the country issuing the reserve currency.

Gradually but resolutely, the system is veer-ing away from the path of inherent stability to become more prone to systemic crises. With global debt approaching a quarter quadrillion dollars, the magnitude of the system’s next crisis would be match up that number.

Concurrently, the power to issue international ‘fiat’ currency is becoming less reflective of the shift in relative economic weight.

It’s the innovation race, s .. smarties

That shift in the economic weight has been brought about not by the US trade deficits, but by China’s headway in innovation and by its manufacturing industries’ swift climb up the value chain, the two prime causes underlying the imbalance.

Impressive as what FAG (Facebook, Amazon, Google) did in the innovation space, BAT (Baidu, Alibaba, Tencent) are catching up with these achievements faster and on a broader scale than anticipated.

That the technology and innovation gap still favors the US is immaterial over the long haul. More portending is the rate at which that gap is narrowing. In the world’s second largest econ-omy, progress in technology and innovation is tracing a trajectory with a steepening angle of ascent. And that is hardly reversible over the foreseeable future.

Band-aid vs. surgery

The nature of the current global economic crisis allows wiggle room for the pursuit of any and

The single international reserve currency confers financial and economic powers to the country issuing that currency

.. the power to issue international ‘fiat’ currency is becoming less reflective of the shift in relative economic weight.


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all knee-jerk responses. These include calls for a review of international banking regulations, or for reformulating the mission and scope of action of the International Monetary Fund, and/or the World Bank, and/or the World Trade Organization. But band-aid is no substitute for sur-gery.

The international financial system needs to steadily, and over the longer view, evolve into a system based on two or more currencies if it were to fulfill, more or less efficiently, the role of regulator of payments, provider of credit, and preserver of assets.

[email protected]

APPENDIXCategories and sub-categories of retail goods and services for which sales performance indicators were built.

The report analyzed retail sales data relating to six categories of consumer goods that include a total of 37 sub-categories and three categories of services grouping 15 sub-categories. Follow-ing are the categories and sub-categories of retail goods and ser-vices covered by the report.


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HOUSEHOLD GOODS – 11 SUBCATEGORIESSanitary Utilities; Glass / Paint / Wallpaper; Hardware; Furniture; Floor Covering; Drapery / Upholstery; Miscellaneous Home Furnishing; Household Appliances; Audio-Visual; Antiques Restoration; Crystal and Glassware

CATEGORIES AND SUBCATEGORIES OF CONSUMER GOODS AND SERVICES

CLOTHING AND FASHION GOODS – 8 SUBCATEGORIESMen’s Wear; Women’s Wear; Women’s Accessories; Children’s Wear; Family Clothing; Shoes; Apparel; Fabric / Sewing

COSMETICS GOODS – 3 SUBCATEGORIESPerfumes; Cosmetics; Personal Care

FOOD AND BEVERAGES – 5 SUBCATEGORIESSupermarkets; Confectionery; Bakeries; Miscellaneous Food Stores; Liquor / Beer / Wine

Goo

ds (6

)S

ervi

ces

(3)

SPORTS AND HOBBIES GOODS – 3 SUBCATEGORIESSporting Goods; Games / Toys; Music Instruments

LUXURY GOODS – 7 SUBCATEGORIESJewelry / Watches / Silverware; Crafts; Art Dealers Galleries; Florists; Cigars; Gifts; Electronics

HOSPITALITY SERVICES – 4 SUBCATEGORIESCatering; Restaurants; Pubs / Nightclubs; Hotels / Resorts

TOURISM SERVICES – 6 SUBCATEGORIESTravel Agencies; Travel Services; Movies / Theaters; Dance Schools / Studios; Tourist Attractions / Exhibits; Clubs

MEDICAL SERVICES – 5 SUBCATEGORIESDoctors; Dentists; Ophthalmologists; Hospitals; Other Medical / Health Services

Table 3 - Monthly retail sales indicators for consumer goods

Clothing & fashion

Food & beverages Cosmetics Household goods Luxury goodsSports & hobbies

goods

Jul-18 58.23 133.86 142.42 76.23 45.99 58.64

Aug-18 56.31 149.31 129.94 75.16 51.27 51.82

Sep-18 38.27 133.45 123.06 69.19 39.44 46.60

Oct-18 41.49 148.53 60.67 67.82 40.11 56.19

Nov-18 47.61 146.49 64.55 85.94 43.22 54.76

Dec-18 70.01 213.99 92.43 90.68 78.58 113.06

Jan-19 49.00 193.80 57.21 65.18 42.54 54.67

Feb-19 37.52 158.12 58.64 60.43 37.14 46.12

Mar-19 44.84 166.43 79.53 57.56 44.04 48.65

Apr-19 52.16 173.43 77.17 64.98 42.67 49.66

May-19 43.54 173.31 83.70 78.81 47.53 41.97

Jun-19 62.82 162.95 90.27 77.35 52.46 49.96

Table 4 - Quarterly retail sales indicators for consumer goods

Q3-2018 Q4-2018 Q1-2019 Q2-2019

Clothing & fashion 50.94 53.04 43.79 52.84

Food & beverages 138.87 169.67 172.79 169.90

Cosmetics 131.81 72.55 65.13 83.71

Household goods 73.53 81.48 61.06 73.71

Luxury goods 45.57 53.97 41.24 47.55

Sports & hobbies goods 52.35 74.67 49.81 47.20


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PREVIOUS EDITIONS OF THE RETAIL ACTIVITY INDICATORS REPORT

FIRST EDITIONCOVERS 30 MONTHS TILL JUNE 2015

PUBLISHED ON AUGUST 10, 2015

90 PAGES

SECOND EDITIONCOVERS 36 MONTHS TILL DECEMBER 2015

PUBLISHED ON FEBRUARY 15, 2016

109 PAGES

THIRD EDITIONCOVERS 42 MONTHS TILL JUNE 2016


106 PAGES

FOURTH EDITIONCOVERS 48 MONTHS TILL DECEMBER 2016


115 PAGES

FIFTH EDITIONCOVERS 54 MONTHS TILL JUNE 2017


123 PAGES


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SIXTH EDITIONCOVERS 60 MONTHS TILL DECEMBER 2017


127 PAGES

SEVENTH EDITIONCOVERS 66 MONTHS TILL JUNE 2018


155 PAGES

EIGHTH EDITIONCOVERS 72 MONTHS TILL DECEMBER 2018


112 PAGES

GREAT NATIONS MAKE GREAT

BRANDS

A semi-annual report prepared by

LFA implementing partnerlfalebanon.com

LFA - CCIABMLRETAIL ACTIVITY INDICATORS

LEBANON | SECOND HALF OF 2018

RETAIL ACTIVITY INDICATORS Second half of 2018 EIGHTH EDITION

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