CASA ROCES

Food has always been one of my passion and to look for such a place to dine is never a problem, but at times, I have cravings for good food with ambiance thats relaxing.  So I tagged along 3 of my friends to dine in this secluded place near Malacanan, Manila.  Amazingly the food is so good and the place really makes one feel walking through the history of Philippine political scene.

The food is mouth-watering and the people managing this dining place have well-trained staffs, I think its being managed by the Cravings Group(bravo! great service).

At the end of the meal, I find this dessert uniquely special that I ordered another serving. lol

This is one place I will always find the best food to relieve me of my stress, surely I will keep coming back for more.  Try to visit this place, its at 1153 JP Laurel Corner Aguado St. San Miguel, Manila.

Stock Market

There is a recent urge for me to take a look at the stock market trends lately and my friends stocks PCOR has drastically climb up to the 19 level last January 5 and now trading the 16.80 mark... she bought it during the stocks IPO and hasn't sold since, I adviced her to sell and buy the stocks when it reach 15.

SMC is one stock I also noticed to have a huge potential for growth and its affiliates are all darling stocks. But one noticeable stock that hasn't diminish since the start of the new year and has consistently been fluctuating in the upward trend is the Cyber Bay stocks, and I'm pretty sure alot of individual investors who has joined the early bandwagon to buy this stock has have hefty gains in the past few days of this year.

Going back to SMC, their recent announcement for their newly formed company San Miguel Energy that will have its international bond offering in preparation for their shift from its current Food and beverage conglomerate into a full-pledged Power-generation/Energy/Communication conglomerate transition speaks pretty well of the company, not to mention that their handling of Petron is already one great indication the stock has been undervalued in a pretty long time since it went public.  Good management is the key to its upsurge in price and not to mention the recent investment made by SMC in the North Harbor for Petron's future depot.

This company is also in the stage awaiting for the congressional approval of the recommision of the long mothballed BNPP.  If the rumor is true that SMC's daughter in law in congress has trully garnered enough support from fellow congressmen and women then surely BNPP will be bidded by SMC as an added portfolio to their behemoth conglomerate.  Oh did I also mention, they recently bought 40% of Eastern Telecom?!

This is one hell of a stock to watch out for.

New Year

Its been quite awhile since I last posted here, and seems like the new year brought so much blessings and new task at hand for me to journey on.  I got so fascinated with the recent upsurge in the stock market and the new optimism of investor with the recent change in our government administration and I hope the new administration, the new zest of local and international investors, the optimism of our traders, businessmen and those getting the interest to  join the bandwagon of this new hope and challenges will ultimately make our country great once more.

Purchase Order vs Pro-forma Invoice

Starting out in merchandising made me immerse myself into a whole new set of business words and documents and the most common thing I am doing every single day of my job is to release Purchase Orders to various merchandise suppliers.

On the other hand there is relative confusion to those who are new in the business the difference of Purchase Order from a Pro-forma Invoice

First let me me explain  when is a pro-forma invoice issued.

Once after agreeing the terms of contract of sale, the buyer has to issue a purchase order or Letter of Credit. Just before this process, the seller has to send a ‘pro-forma invoice’ to buyer, mentioning complete details of agreement of sale. Normally, purchase order or Letter of credit is opened on the basis of this pro-forma invoice sent by the seller. 

So, we can treat pro-forma invoice as a document of commitment to sell the goods to the buyer as per the terms and conditions agreed between both in person, over telephone, by fax, email or any other mode of communication. In other words, we can treat the pro-forma invoice as a ‘confirmed purchase order’ from the seller, although the official purchase order has to be issued by the buyer. The pro-forma invoice is issued before sales takes place. 

Once after receiving pro-forma invoice from the supplier, the buyer sends a purchase order or opens a letter of credit to the supplier.

Here we come to the point of knowing what a Purchase order really is.

Once the seller sends the details of the product(even a sample of an actual merchandise) and after satisfaction of quality, price and terms and conditions the seller sends a pro forma invoice to buyer. Based on such pro forma invoice, buyer release a Purchase order to seller as confirmation of purchase of his goods. Purchase order contains the details of product, quantity, price, payment terms, delivery terms and other terms and conditions of purchase contract as mutually agreed between buyer and seller. Normally purchase order is prepared by buyer on the basis of pro forma invoice sent by seller to buyer. Once after acceptance of purchase order by seller, the purchase contract exists. 

Thus delivery of goods by the seller shall be expected on the date indicated in the Purchase Order, sometimes there are instances where suppliers cannot fully fulfill the quantities indicated in the purchase order that there are still negotiations that can be made verbally.  Most often especially for big companies, delivery of less than 50% of the indicated quantity means rejection of the delivery.  In some instance, a new Purchase Order has to be issued indicating the adjusted quantity that the seller can deliver.

LED Lighting Revolution

We all aim to have a doable market power efficiency that translates into energy saving and cost saving for everyone who is a consumer.  With the rising cost of fuel energy that powers utility companies, every consumer wants to harness products use that will make their monthly electric bill a manageable expense to say the least. The market has always been on the lookout for the best product that delivers highly tangible usage, low wattage and most energy saving functions.  

Fortunately, in recent years, LEDs have become the most popular energy efficiency measure on the market, the rate of adoption has not been easy.  It doesn’t matter whether the existing lighting is incandescent, fluorescent, metal halide or sodium. When improving lighting energy performance LED sources have become the number one efficiency recommendation.  LED lighting has been high on the wider energy efficiency agenda for several years, but right now no other technology change offers the same level of power reduction, whilst maintaining or improving on operational performance.

LED lighting has fast become one of the top sustainability measures taken by businesses and the public sector. Heavily-incentivized renewables may be attracting the attention from policy makers, investors and those keen to make a ‘green’ statement. But in terms of carbon abatement the deployment of LED solutions provides some of the best ratios available when it comes the amount invested per tonne of carbon reduced.

The step-change in more recent years has been the deployment of LED technology to illuminate wide areas and from mounting heights previously thought to be beyond the range of the technology.  Today all sectors, from logistics companies with large warehouses and external spaces to light, through to small offices and retailers, can take advantage of the LED revolution.  The commercial case for investment is strengthening as performance improves, product costs decrease and the relentless rise of energy costs continues.

The best commercial cases are present where operating hours are highest.  Where continuous operation is required payback periods are often close to one year.  However even in office applications where annual hours of operation are 3,000 or more the return on investment can be less than five years - especially where effective controls are deployed.

Lack of awareness is a major factor why aren’t we seeing ubiquitous uptake of this game-changing technology? The inertia around replacing systems which may be providing an adequate function is another - many businesses have the attitude that ‘if it ain’t broke don’t fix it.’  But we find that a key barrier to action is the difficulty end users often with limited technical expertise face when seeking a supplier or partner to provide a solution.

The standard of product provided is important here: not all LEDs are equal in terms of lamp life or lamp quality.  Warranty periods matter as well – but fundamentally you do not want to deal with product failure.

LED performance and reliability has made it indisputably the leading energy efficiency technology on the market. With energy costs constantly rising, alongside the pressure to reduce carbon emissions, we expect the adoption of the technology to continue at a rapid pace. But while many organizations have woken up to the potential with LEDs, a greater awareness of the opportunity, along with improved focus on quality and confidence will help to drive up the rate of implementation and continue driving down carbon emissions.

Calculating chargeable weight under airfreight in import-export

There are several ways to ship your products to your customers abroad and here I want to share how airfreight charges are being computed, so you will know more or less how much you'd be paying for the cargo you will be shipping through airfreight.

How to calculate chargeable weight under airfreight in exports and imports.

Freight charge under air shipment is calculated on the basis of weight of cargo. Commonly a question arises here, whether actual weight or chargeable weight?

In an air shipment, airfreight charge is calculated on the basis of actual weight or chargeable weight, which ever is higher. Then what is Chargeable weight? How to find chargeable weight?

Chargeable weight is an equilibrium point where in actual weight and volume of cargo balance.

Why chargeable weight in airfreight?

Let me explain the importance of chargeable weight in airfreight. Why do air carrier balance weight and volume of cargo?

Let me explain the importance of chargeable weight in simple terms. If a shipper exports cotton, the actual weight of cotton is very low but occupies a good amount of space as a volume. In this case, if airfreight is charges on the basis of actual weight of cargo, the said shipper needs to pay a very nominal airfreight compared to a shipper who exports iron plates. Am I right? Here is the importance of chargeable weight by considering volume of cargo and actual weight of cargo at an equilibrium point.

Calculation of chargeable weight in airfreight.

In order to find chargeable weight of cargo you need to have measurement of package of goods.If the cargo measurement are in centimeters, the total volume of cm3 to be divided with 6000. In other words, if the volume is in cubic meter (CBM), the said volume in M3 to be divided with 0.006. Air carriers charge airfreight on the basis of chargeable weight or actual gross weight which ever is higher.

Let me explain to calculate chargeable weight in simple language to make understand easily. I am going to explain with 3 examples, the method of calculation of airfreight for export shipments.

You have three shipments to be exported separately. Measurement of cargo length, width and height

Shipment 1:

Gross weight =750kgs

Measurement of cargo = 102cm X 98cm X 106cm = 1 box
80cm X 65cm X 103cm = 3 boxes

Total volume = 1059576 +(535600X3) = 2666376 cubic centimeter

Total chargeable weight = 2666376 / 6000 = 444.396kgs

Here in shipment No: 1, the gross weight is 750kgs and chargeable weight is 444.396kgs. Hence, actual gross weight of 750kgs (which is greater) is charged airfreight.

Shipment 2:

Gross weight = 850kgs

Measurement of cargo = 120cm X 160cm X 115cm = 2 boxes
75cm X 130cm X 125cm = 2 boxes

Total volume = 4416000 + 2437500 =6853500 cubic centimeter

Total chargeable weight = 6853500 / 6000 = 1142.25kgs

Here in shipment No:2, the gross weight is 850kgs and chargeable weight is 1142.25kgs. Hence, airfreight is charged on the basis of chargeable weight of 1142.25kgs.

Shipment 3:

Gross weight : 950kgs.

Measurement of cargo = 1 meter X 1.05 meter X 0.85 meter = 2 boxes
0.7 meter X 1.50 meter X 0.60 meter= 3 boxes

Total volume = (0.8925 X 2) + ( 0.63 X 3)
1.785 + 1.89 = 3.675 cubic meter

Total chargeable weight = 3.675 / .006 = 612.50kgs

Here in shipment #3, the gross weight is 950kgs and chargeable weight is 612.50kgs. Hence, airfreight is charged on the basis of actual gross weight of 950kgs which is greater than chargeable weight. Also note, the measurement in shipment 3 is in meter and volume calculation also may be noted.

Importation Basic Computation

I started working for a major retailer in 1997 but it was in 2001 when I first got to deal with importation for another major retailer.  What I primarily have to import are toys, glassware, footwear, apparel, household linens, hardware stuffs.

When I began doing importation, I have totally no idea how to do calculations whatsoever, even for margins but learning on the job was really a real eye-opener, how big profit is being made by retailers especially those who do import goods for sale locally.

Let me share here one of those calculation that may prove useful for new entrepreneurs who wants to venture into overseas importation of goods.  I hope this will be useful for you readers.

Let us first learn the different importation terms:

Less Container Load or better known as LCL shipping is a good way to ship large orders and items that are large or heavy.  LCL shipping is based primarily on the amount of volume with a minimum shipment of one cubic meter.

Calculating volume of cargo is a common subject for all exporters and other shipping related companies. If cargo is Full Container Load (FCL), the freight charge is for full container load basis. But if the cargo is a Less Container Load (LCL), normally a freight forwarder charges freight on the basis of volume of cargo. A freight forwarder charges freight on the basis of CBM.

The method of calculation of volume of cargo under sea LCL shipment

CBM means Cubic Meter. However, the total weight of cargo should not exceed 1 ton. That means, if the cargo weight is above 1000kgs, the volume of cargo is treated on the basis of weight. In short, freight forwarders charges LCL rate on the basis of ‘per CBM’ or per weight of 1000kgs (1 ton) which ever is higher. CBM – cubic meter is calculated by multiplying length, width and height of packages of goods. For example, if the length, height and width of a cargo is 2.3 meters, 1.4meters and 2 meters respectively, the volume of cargo is 2.3 X 1.4 X 2.00 = 6.44 CBM. If you have the measurement in inches or centimeters, first you need to convert in meters and then calculate CBM which will be easier for you. If freight forwarder quote a rate of USD 10.00 per CBM, the rate will be 6.44 CBM X USD 10.00 per CBM = USD 64.40.

If the weight of the said package is 7 tons (7000kgs), the freight on LCL is calculated on the basis of weight. That is, 7 tons X USD 10.00 = USD 70.00. So, weight of 1 ton (1000kgs) is treated as 1cbm. In other words, the LCL freight is calculated on the volume of 1 CBM or weight of 1 ton (1000kgs) which ever is higher. 

Please note that the shape of the crate does not have to be 1 meter by 1 meter, it can be any size it is only the volume that is calculated.

We calculate LCL shipments by taking the item or items that you would like to purchase and calculate their given volumes.  To do this we first take the length, width and depth of each piece and add from 2-10 centimeters to each dimension.  We add the 2-10 cm to the size to allow for packing and framing.  Once we get the total volume of the pieces you are ordering we divide the total volume by 1,000,000.

We get the 1,000,000 figure from the length 100 cm multiplied by width 100 cm multiplied by depth 100 cm.  Take note that there are 100 cm in one meter, thus there are 1,000,000 cm in a cubic meter.

For example:

Item #Box1

Quantity 1

Size 75 x 50 x 90 cm

Let us assume that this item is fragile so it will need very good packing and framing.  To ensure that we are able to pack this very well, we will add 10 cm on to each side of the object.  The new shipping size of this box is now 85 x 60 x 90 cm.

85 x 60 = 5,100

5,100 x 90 = 459,000

459,000 / 1,000,000 = 0.46 or 46%

From this example we know that this box will occupy 46% or about half of a cubic meter.  Since there is a minimum shipping volume of one cubic meter for LCL shipping, there is an extra 54% of a cubic meter that can be used. 

Example 2:

Item #BOX 2 Quantity 2 Size 10 x 40 x 60

Item #BOX 3 Quantity 40 Size 50 x 30 x 20

Item #BOX 4 Quantity 1 Size 75 x 50 x 90 cm

Let us assume these items are all fragile so it will need very good packing and framing,  To ensure that we are able to pack this very well and we will add 10 cm on to each side of the object.  We now have the following shipping sizes.

Item #BOX 5 Quantity 2 Size 20 x 50 x 70	Item #BOX 6 Quantity 40 Size 60 x 40 x 30	Item #BOX 7 Quantity 1 Size 85 x 60 x 100 cm
20 x 50 = 1,000 1,000 x 70 = 70,000 70,000 x 2 =140,000  (2 is the quantity)	60 x 40 = 2,400 2,400 x 30 = 72,000 72,000 x 40 =2,880,000	85 x 60 = 5,100 5,100 x 100 = 510,000 510,000 x 1 =510,000
Now we add the volumes together to get a total shipping volume:140,000 + 2,880,000 + 510,000 140,000 + 2,880,000 + 510,000 = 3,530,000 (this is the total cm) 3,530,000 divided by 1,000,000 (the number of cm cubed in a cubic meter) = 3.53 cubic meters.

If you do not understand these examples don’t worry when ordering all you need to do is give us the items that you would like and the quantities we will do all this for you.

At the beginning of this answer we mention that volume is the primary factor in calculating LCL shipment there are a few other things that affect the way LCL shipping cost are calculated.

1. all order need to be insured, insurance for LCL shipments is calculated at a rate of 3% of the cost of the goods.

2. Document and Export Fees are added to the shipping cost per order not per cubic meter

3. The maximum weight of a cubic meters goods can not exceed 350 Kilograms, if this is the case with your order we need will need to calculate shipping rates by weight not volume.

Good luck to all entrepreneurs who are eyeing to enter the importation business and may you find this educational.

Best-Selling Toy in the World

Ever wonder, what is the world's best-selling toy? I have always been fascinated by facts and history and as the head of the Toys Department category, I have always thought, the Barbie, a super-hero toy, a Train Set may have dominated the frontier of toys... So I began to read all about toys and I was amazed that people are so fascinated that it sold more than 350 million pieces of this educational piece of toy.  Its the Rubic's Cube or some may call the Magic Cube that has been declared the best-selling toy.

Rubik’s Cube began in 1974 by Erno Rubik,a Hungarian sculptor and professor of Architecture,  he wanted a working model to help explain three-dimensional geometry.  It took him one month before he was able to solve the Cube for himself.  Over 350 million Rubik’s Cubes have been sold worldwide – making it the best selling toy of all time.I have several friends who are really good at playing this cube,  I have to admit, I don't have much patience to learn the various tricks in playing this game.

But I must say, I can't remember how many Rubik's Cube have I bought myself and eventually would have lose it or have given it away to kids as a fun way of making children's learn an educational game such as the Rubik's Cube.

With the proliferation of many kinds and designs of a Rubik's Cube, it has evolved tremendously and catching up with the aficionado's of this toy.  There are indeed many countless ways to enjoy playing this game.  But as for me, it may only turn up as a paper weight in my office as I find the colorful toy relaxing to look at in the same way most people likes to nibble and twist and return the thing to its original completed same side colors. 

Necessary Risk to Increase Profit

In business as in any other endeavours in life, we sometimes have to take the necessary risks to make money.  I remember there are times in the course of my work as a merchandising manager, be it in a boutique setting, department store, supermarket or hypermarket banners, I relatively apply the risk-taking instinct in me in doing my budget calculations and purchases.  Even to some extent exceeding what has been allocated in my budget.

Don't get me wrong but my instinct tells me to take the calculated, well analyzed approach in my risk-taking. For example, there was a year when the crisis in 2003-2004, business has been slowing down but on the world stage there is the war between the US against Saddam Hussein in Iraq, after figuring the events and the prevailing conditions at that time, it does not take a genius to that social sentiments and peoples awareness are about the war that is going on.

Having had to handle several importations, my immediate boss, the owner and vice-president for merchandising gave me a last minute call the night before my flight going to Xiamen, China.  She said to me "Stick to the budget and do not buy anything that is not saleable".

Taking that warning as her way of reminding me that if I do not follow her advice and go beyond my purchase power and budget allotted for the categories I am handling, and if I fail in delivering the target sales for the following sales quarter, I assumed that my head will roll and I could possible be losing my job for neglecting to take her sound advice.

And so during the course of my sourcing of merchandise in China, from Xiamen to Yiwu to Shantou and Chenghai, China.  I diligently went through the nitty gritty work of selection of goods, computing the budgets, visualize how each products will be displayed once they arrive in our retail store, I have to remove those that do not fit or has high costing, I test, scrutinize, check every details of a product, see the product information, make sure there are no damages, is not prone to damage during transport shipping etc.

Even for the tedious tasks I am still exceeding my allocated inventory purchase budget by Php 16 million, so I have to reduce again the quantity for purchase of some stock keeping units (SKU), and there are times when the factory would not accept orders that are less than 10 cartons, to this my only resolve is not to buy it at all.  At the end of my 2 weeks "buying" spree I am still way above my budget by a fraction of 10 million.

So I said, I am sticking by those purchase, I will just need to fixed the budgetary overdraft once the first few shipments arrive in Manila.  42 container-full of various merchandise have been expected to be shipped to the port of Manila in stages of deliveries.  Initially I have to give the go signal for the first 6 containers to be shipped out of China in 2 weeks.

The first six containers has to reach the store shelves within 5 days, thus I have to authorize the receiving department for immediate barcoding and tagging of the goods and must meet the 5 days time-table I have set out for operations to carry out.

I went hands-on in training the salesforce, my front-end staffs that has the day to day interaction with the consumers and listen to their opinions, I have to listen how each customers would react, move, roam around the store selling area.  I have to orient them on the new products that have just arrived.

Amazingly, the first 6 containers sold 40% of the inventories within 2 weeks, and so I have to give the go signal for 18 new containers prior to the depletion of the first batch.

In the end, I not only got to stay for the next several years in my job, but that was the year I beat the highest sales ever made in the 27 years of that company's sales history, a whooping Php 175 million.

Did I exceed my budget, i can honestly admit to my boss that I reneged on her advice, but at the end of that meeting, she told me "I don't know how you did it, but from hereon, i trust you know your own judgment, Just rake in as much money as the company needs, You are really a magician".

And so I was called the miracle magician by my peers for being defiant in maintaining the budget, yet was able to hit the highest recorded sales of the company.  It has been a very satisfying and humbled me in every way that made my skills in retail more masterful by experience

One angle of love

In the countless years of loving, hoping, sharing, caring, giving of oneself...often the word love triangle has always been a possibility but not an option.

One instance of abrupt encounter led to another, that has build up rapport and unravels many new possibilities. One chance encounter that led to constant touch and communication that led to friendship that led to another echelon of relational bonds... an affair.

Despite one party knowing fully well that the person is attached to someone, that one vicious passionate evening became a frequent getting in touch affair... one led to another and a new relationship comes to bloom. One falling down on the abode of heirarchy to humbly bow low and love someone who isn't emotionally free.

Sad as it may, but the real partner doesn't even realize the infidelity going on with his partner and the new "friend". A love triangle that never was, as only two individuals madly fell for a trapping. Not to mention the real partner is going on a distant land in search for new opportunities, leaving a lonely partner scrambling for the touch and constant presence of a partner.

Is it wrong to love someone who is knowingly loved and is loving someone... is it normal to fall and be lost in the whole intellectual and emotional imobility just because its better to play fire than be idly bored with constancy... is it wrong to be intimately drained by the whole affair... is it a grave sin to snatch away the happiness of someone whom you haven't met but is madly inlove with the same man... is it wrong to be selfish... is it plain stupidity or just a case of blindness because of selfishly loving someone...is it really a risk worth the effort and all the loving?

Those question I do not know how to answer...
As loving is not exclusive nor is it quantifiable...
Loving someone isn't a grave offense...hurting someone is...
Loving isn't bound by perfect timing...but circumstances...
Loving isn't chosen by us, but comes along in many mysterious ways...
I don't know where it began and neither do I have an idea where it will end...
Will be it be a happy ending for oneself or a grieveous ending that can never trully bring oneself up again...

Time will tell...nobody can rightly say and judge what the depths and meaning of truly falling inlove as everyone has been strucked by love's sting! I'd break every chain of principles of my life just to be with you. Now a new option of loving without thought of hurting is the ultimate choice for existing.

If loving you is wrong, I dont wanna be right ever again!

I just can't stop myself from loving you!

If only the devil is cuddly!

In these times of world economic crisis, rising unemployment, retrenchments and many stressful news of the hard times ahead has cause many to retool their skills, hone their talents and even take on new challenges in their career so as to continually survive the turns of events.

Sad to note that we also hear news of suicides, self inflicted harms and threats to other people's personal spaces by scheming thefts and even murder. Some have lose their ideals and without conscienciously considering the welfare of others safety... a recent news last sunday of a church preacher being shot inside the church while delivering his sermon to his congregation is outrageously shocking, A kid who commited his life to a gunshot is often inconceivable, a man who is one of the richest men in last year's Forbes list jumping off a railway station is tragic, a rich New York investment banker who put a bullet on his temple and many more tragic stories of sort that will make us wonder, is the present life so wicked!

But many facets of life contributes to each one's thoughts and feelings that undoubtedly a world economic crisis has partly to do with the human morale bankruptcy, which is sad and anyone who still stood for the ideals of hope can only wish there could have something that everyone around those emotional distress individuals could have done to prevent such tragedies.


But we can wish that only if the devil can be just as cute as the ones in the picture above, perhaps, people who have been wretched with much burden could still have afford them a bit of a smile. Unfortunately, the only devil that behooves all of us is our own shadow of self worthlessness and despairing thought of life's beauty and values.

Priceless Treasures

As I have been cleaning my room and arranging some books and stuffs that has cluttered though my comfort zone, I cam across some notes, letters, conference souvenirs, photos and postcards that reminisce the days past.

Remembering those people, names and happy thoughts together makes me ask where could they be by now. As recently I have found a few old friends and even acquaintances through the social network sites, there's a feeling of euphoria and gladness to reconnect with some familiar faces and smiles.

Though many changes have been through all of our lives, we still manage to build up our conversations and mail exchanges with questions of where the other friends may be by now. Alot of people we've lost touch through the years, more than a decade that seems to be a timeless absence from each other's communal radar.

Where everything matters that has encircled our existential lives, we come across countless people and friends along our way towards achieving our fulfillments in life. Nevertheless, our constant blossoming and aim to widen our reach of connections, allies, friends that can readily lend a helping hand in our personal quests and journeys can never replace the bonds that binds us with our old pals.

To the old, the new and the future reasons of friendships we can cherish as keepsakes of our lifetime that brings joy of colors to our own life, a treasure worth keeping to be treasured.

Thank you for all of those priceless GEMS I call friends.

Retail Sales Report - An Economic Indicator

The United States and the United Kingdom have both given importance to the contribution of retailing markets to their economic growth that they even have monitoring departments within the government to measure how these sector fared monthly, quarterly, semi-annual and annually in measuring their economic viability and contribution to how the consumer spends their hard-earned money.

In the Philippines, we also have private groups such as Business Monitor and Euromonitors but these are not as complete as what the US Department of Commerce would have done, but are good basis for our own country's view on what the retail sector in the Philippines has been doing.

An Overview
Retail Sales is very closely watched by both economists and investors. This indicator tracks the dollar value of merchandise sold within the retail trade by taking a sampling of companies engaged in the business of selling end products to consumers. Both fixed point-of-sale  businesses and non-store retailers (such as mail catalogs and vending machines) are used in the data sample. Companies of all sizes are used in the survey, from Wal-Mart to independent, small-town businesses. 

The data released will cover the prior month's sales, making it a timely indicator of not only the performance of this important industry (consumer expenditures generally make up about two-thirds of total gross domestic product), but of price level activity as a whole.Retail Sales is considered a coincident indicator, in that activity reflects the current state of the economy. It is also considered a vital pre-inflationary indicator, which creates the biggest interest from Wall Street watchers and the Conference Review Board,which tracks data for the Federal Reserve Board's directors. 

The release will contain two components: a total sales figure (and related % change from the previous month), and one "ex-autos", as the large ticket price and historical seasonality of auto sales can throw off the total figure disproportionately.

What it Means for Investors The release of the Retail Sales Report can cause above-average volatility in the stock market. Its clarity as a predictor of inflationary pressure can cause investors to rethink the likelihood of Fed rate cuts or hikes, depending on the direction of the underlying trend. For example, a sharp rise in retail sales in the middle of the business cycle may be followed by a short-term hike in interest rates by the Fed in the hope of curbing possible inflation. This would cause investors to sell bonds (causing yields to rise), and could pose problems for stocks as well, as inflation causes decreased future cash flows for companies.

If retail sales growth is stalled or slowing, this means consumers are not spending at previous levels, and could signal a recession due to the significant role personal consumption plays in the health of the economy.

One of the most important factors investors should note when viewing the indicator is how far off the reported figure is from the so-called consensus number, or "street number". In general, the stock market does not like surprises, so a figure that is higher than expected, even when the economy is humming along well, could trigger selling of stocks and bonds, as inflationary fears would be deemed higher than expected.

Retail companies themselves can be especially volatile with the release of this widely read industry report. The release data will show the sales performance of all the component sectors within retail (such as electronics retailers and restaurants), allowing investors to peek in on relative "pockets of strength" within the overall figures. An investor holding stocks in retail can see how his or her holdings are performing relative to the sector as a whole - a valuable analysis regardless of overall market conditions.

Strengths:

• The retail sales data is extremely timely, and is released only two weeks after the month it covers.
• The data release is robust; investors can download a full breakout of component sectors, as well as spreadsheet historical data to examine trends.
• Retail sales reports get a lot of press. It's an indicator that is easy to understand and relates closely to the average consumer.
• A revised report comes out later (two to three months on average), amending any errors.
• Analysts and economists will take out volatile components to show the more underlying demand patterns. The most volatile components are autos, gas prices and food prices.
• Data is adjusted seasonally, monthly and for holiday differences month to month.

Weaknesses:

• Revisions to the report (released about two months after the advance report) can be quite large, and the sample size is relatively small compared to the number of retailers opening their doors to consumers.
• Retail sales data is often volatile from month to month, which makes trend-spotting difficult.
• The indicator is based on dollars spent and does not account for inflation. This makes it difficult for individual investors to make decisions based on the raw data.
• Does not account for retail services, only physical merchandise. The U.S. is an increasingly service-based economy, so not all retail "activity" is captured.

The Closing LineRetail Sales is one of the big ones - a report that can shed a lot of light on the economy. It provides detailed industry information and can really move the market. Investors will best be served by waiting for the analysts to sort through the report, removing any overly volatile components, and drawing conclusions from there. For owners of individual retail stocks, look at the sector growth rates to determine the relative performance of individual stocks held in a particular sector.

On a personal note, I hope our government will give more emphasis and importance by monitoring the retail sector to give our economist and students of retailing ample, complete picture and data as to the over-all potential of contribution to grow and even support expanding enterprises.  We have many parallel importers, underground retail economic activities going ons that slipped the very eye of government statisticians. What private sector monitoring has are primarily focus towards the big retail players and does not quantify the over-all dynamics of the mass-retail sector.

Food Shortage?

Its been the news all over the world, that even the Haitian Presidential Palace has been attempted to be ransack by the populace due to the growing concern on food scarcity.

Rising oil prices, food prices, shortage, hoarding, blackmarket, queuing for food, food stamps, are this for real? Could there be some manipulation being orchestrated by some force or conduits of power? Global warming have already been pointed as the major culprit, for many years, every nation of the world, turned their arable land for food production into land for planting bio fuel energy sources.

Will another war be declared due to food clamoring for survival. May it never happen.

This is the year and I bet just the start of a 3 year food crisis worldwide, Inflation rising, Demands growing, Food depleting, Income cannot cope. The Real CEREAL killer.