Uglier Than You Thought

I've often noted that I'm an equal opportunity intelligence-gatherer. When it comes to finding out what is really going on, I'd just as soon visit mainstream media websites like ft.com, wsj.com and bloomberg.com, as I would alternative media portals such as www.drudgereport.com, www.worldnetdaily.com and www.newsmax.com, blogs like nakedcapitalism.com, globaleconomicanalysis.blogspot.com and bigpicture.typepad.com, bearishly-oriented websites such as prudentbear.com, financialsense.com and safehaven.com and portals such as www.fallstreet.com, bullnotbull.com/bull and www.dollarcollapse.com, and "alternative" resources like whatreallyhappened.com, www.rense.com and stevequayle.com.

In the course of my today's hunt for news and insights, I came across the following rather eye-opening article, "Something Big Out There,"  at Surfing the Apocalypse Network (hat tip to whatreallyhappened.com)

This was posted today at www.lemetropolecafe.com. This is a pretty scary indicator that things are a whole lot worse than most suspect...

Something Big out There

Hi:
Found this on a chatboard,
cheers,
Ed xxxxxx

I have worked retail for several years. I am in mid-level store management right now. I don't want to say exactly what company I work for, but it is in the top 3 largest. I work at a store in a major city.

There have been some crazy things going on recently. The changes that we are being asked me make per corporates direction makes me think that the people at the top think something VERY big is going to be happening to the economy soon. I don't think the media or the government is giving us the full details of what is actually going on, but I think the CEO's and others at the top are fully aware and are making plans.

For one thing I check sales every day. At the store level we usually compare what sales are today compared to sales for the same day, week, month, and year last year. Sales at our store, our district, and company wide have taken a HUGE drop compared to the same time last year. When I looked at them today my store and every store in our district was down over 30% for the same time last year. The company as a whole is also in the negative for the same time last year. (but not as much, but it gets lower every day).

Honestly at my store I could say that we have done everything in our power at the store level to increase sales, but it just isn't happening. Departments like electronics are literally almost completely empty the entire day. The only departments that actually are getting sales are consumables, health, and chemicals. Just walking the store these are the only departments I ever even see people in ever since christmas ended.

Sometimes I will cover the service desk so a team member can take a lunch/break. When I do I sometimes process peoples credit card payments which lets me see how much they owe and how much they are paying. There are tons of people with THOUSANDS of dollars on their card only making minimum payments. These balances are usually at interest rates over 20%. Then there are people bringing in checks for the full amount, but they are BALANCE TRANSFER checks.... they are just moving it to other cards.
But that isn't what really worries me. What worries me is the changes corporate is making. I have worked here for years, and in the last 4 months I have seen more changes than all that time combined.

We are getting emails all the time from corporate telling us to reduce costs anyway we can. We recently got one telling us to start pulling fluorescent light bulbs, that we don't need all of them in order to provide illumination.... and those bulbs barely use any power.
Corporate has instructed all stores to lower the AC. It has been lowered enough to the point we get complaints from team members and customers.

Corporate has sent us emails telling us to make sure we fill bags to the absolute possibly maximum. They are not even sending us large bags anymore to some stores.
Corporate has recently eliminated (what I would estimate based on how many positions we lost vs the thousands of stores we have) several thousand management positions at *all levels* of management at stores.

This NEVER APPEARED ON THE NEWS! I suspect because it was not a traditional lay off. What corporate basically told us was "Your position is eliminated, but you are not laid off. Once you quit/get your self fired/whatever your position just won't be filled again" So we are basically slowly losing jobs as people company wide quit, get fired, etc.... but the jobs are never filled again. So basically we are cutting jobs, but the way it is being done is preventing it from getting reported in the media or tracked by the government as job losses.

No non-management positions have been eliminated, instead hours have been cut for them.

Raises this year have also been lowered in amount compared to in previous years. They have been lowered enough that corporate is keeping it a secret until we have to tell team members.

The company is also buying less. Our distribution centers are sending us, for example, 3 of a certain item when normally we would get 50.... and they don't send us more until those sell. I have not been able to keep departments full of product despite contacting corporate and asking for more because we are being sent such small amounts of product.

We have had trucks cancelled all the time now simply because we sold so little that they can't justify sending so few items to a store.

People are simply NOT buying things. They are not buying anything that isn't a consumable basically. I asked our pricing team to do a store mark down and lower the price on almost all of our TVs by 30-50%. We still have not sold a single one in over a week after! Our TVs were not priced very high to begin with.

Our pricing team is also being sent price increase changes from corporate in huge numbers. I am talking entire aisles of product for them to raise the prices on.[Bag here: Inflation? what Inflation?] The other day we got a STACK of pages of product to increase prices on. We thought it HAD to be a mistake because that has simply never happened before. We have emailed corporate asking if it was a mistake... we have not heard back yet, but I suspect it was not.

Many stores are now changing to non-overnight stores. They will be closed overnight and ALL power except in office areas will be cut overnight to save on costs.

There have even been changes to job descriptions recently. Corporate is basically giving job dutys to people at lower levels which used to be reserved for people at higher levels. Even some management tasks are being given to people in non-management positions. Basically they are paying people less to do what people used to get paid more to do.

Things are NOT looking pretty right now. I can tell you from a consumer spending point of view something is definantely going on.... All these changes tell me the people at the top are trying to brace for something big that is going to be happening to the economy.

http://www.lemetropolecafe.com/dospassos.cfm?pid=6798 Subscription required - Free 2 week trial available at the site.

Comments

[Samuel]

I work for a large packaging manufacturer near Los Angeles, and I can tell you that I see a few similarities with this story.
March and April are usually slow here, but these particular two months have been much slower than usual.
Our production floor is running four-hour shifts instead of the usual eight, there are a lot of angry people here who will not be able to make ends meet because of this.
And yes, many management and other employee positions have been eliminated. ( who's to say, I could be next).
There have been no raises at all here, we also have had the lights removed or turned off in certain areas to save electricity.
In all my 15 years at the company, this one thing has never happened, and that is items that we normally warehouse have been eliminated altogether. and the funny thing is I sent an email to the GM asking if this was a mistake. However I got my response immediately. 'No mistake'. Thats when the rumors begin about a sale of the company. That I cannot confirm, just a rumor. (?)
Vendors of certain raw materials have been raising their prices substantially, and a couple of competitors have gone under. But loosing competitors has not resulted in more business, this is because many of our customers have either moved out or quit business as well.
Were definitely feeling the pinch, and being on the manufacturing end, we get to see it first hand.
So I'm going to keep my eyes peeled and watch the large companies we service for more clues as to what they're bracing for.

[Independent Accountant]

Interesting. In going into certain retailers like Home Depot, Borders, Loews and various restaurants I frequent, I noticed a decrease in traffic in the last 60 days. Also the roadways are not as full during rush hour.

[Brian]

This "chat room" clip seems bogus to me. I was in a believing mood until the credit card clearing part. I've worked retail and you are not able to see credit card balances and transactions at a register while clearing a customer's transaction nor are you able to see what their payments are. Sure there are some parallels to this letter and the general economy, things are gettings slow etc., but it just strikes me as a fake. The details in the quoted post are so vague, anyone could write this and say anything they want.

[Al]

I agree with Brian. The credit card info sounds bogus which leads me to question the validity of this story. On the flip side, I have noticed that stores seem emptier than previously and more importantly, the lines at check outs shorter.

[roger pasa]

At any other time I would classify this article as fear mongering (90% chance it is) unfortunately in this day & age it is believable.as to the actions described they need to be verifiable ,that should not be to hard to do.

[Industrial Engineer]

I'm an industrial engineer who pulls his hair out whenever in a retailer because so much 'waste' is obvious to our trained eyes. Most of the post sounds like something my profession would expound to this retailer if we advised them on how to respond to early signs of what could be a protracted downturn in business.
As for accessing card balances and payment histories at a service desk that accepts payments on card balances....well I would not dismiss that as a possibility. Many retailers enforce "can nots' and "do not' by embedding access restrictions into the software, and distributing access codes to select managers. However, store staff has a way of giving access codes to each other [that's a whole 'nother story].
The 'efficiency expert' in me says this retailer is doing all the right things to cut expenses including things that count as well as dumb annoying things that are misguidedly popular ‘action steps’ but really just annoy the consumer and/or staff.
Wholesale shuttering of big boxes by retailers may be cost-effective in some cases but the calculus involves lots of other variables, much of it real estate related as well as balance-sheet related. Sounds like this chain is not at that point and if their management savvy extends beyond their cost-avoidance measures cited in the post, they may be able to withstand the gale winds without headline-grabbing store closures.

[Industrail Engineer]

Regarding the post’s legitimacy: Another possibility is that this is a 'deep throat' kind of post where the poster is indeed disclosing true facts; however, they're protecting themselves by pretending to be 'just a retail clerk'. They could really be in regional management, or pretty high up in accounting, or a junior member of the consulting team bought in by the retailer.
I think many readers of online blogs are concerned and frustrated that John Q Public is just not seeing...or able to see…the magnitude of the storm approaching on the horizon. This poster may feel s/he is doing a social good, akin to whistle-blowing' on the economy, by educating readers on the signs of a brewing storm.

[Jes]

I've noticed in two different Ross stores (San Diego area) that racks that used to be packed tight with clothes were sparse for weeks. They've recently added more merchandise, but the racks still aren't as jammed as they used to be. I've also noticed that Mervyns stores are running extensive deeply discounted sales frequently and they have a large amount of winter merchandise still on the racks.

[Lady From Middle America]

Fake? For real? I'm not sure, but there is a ring of truth about a lot of the details. I hate shopping with hoards of other people, and let's say I've been very happy lately. I've seen a lot of these "death by a thousand cuts" layoffs that never get reported. I've also noticed at least one major retailer who shut down a lot of lights a few months ago, only to turn them back on after customer complaints.

I'm wondering the age of the person who wrote this story. It sounds like this person has never been through a real economic downturn before (or is maybe pretending to be so naive). A lot of what's going on is what a prudent company would do to try to keep costs down until the next recovery period. I've seen non-managers being given managerial tasks for at least 20 years now, during the time when middle managers became corporate pariahs. Some cost-cutting orders can look absurd, especially when proposed by eager beaver junior executives. I've had to go through archived files in order to pull out old paper clips. I've also worked in offices where people looked through our trash at night to make sure we were using both sides of our paper.

I really became interested when I saw that "Our pricing team is also being sent price increase changes from corporate in huge numbers." That was pretty common during the 1970's, and I was wondering if I'd ever see that again. Back in the 1970's, grocery shoppers bought consumables in larger quantities to protect themselves from the next week's round of price increases. I can remember putting groceries away for my mother and tearing away three layers of stickers from an item, with each sticker featuring a slightly lower price. I'm also waiting for companies to repackage their products in such a way to make it difficult to tell whether they are raising their prices. I suspect this has already happened to one of my "reformulated" laundry detergents.

I think a key difference was back in the 1970's we already knew the economy was kaput, so the high inflation rate was like a next step in a sequence of events. The commenter in this story sounds like he/she truly believed all the "experts" that our economy was doing great during this decade and is maybe shocked that things supposedly collapsed like a house of cards overnight.

[millaaron]

On the Credit card item

He said the "service desk"
not a regular check out register

If the customers are paying the "store brand" card the the clerk would be able to get the info

[John]

This is very true. Up here in Canada, when we "swipe" the card, we can see their entire purchase history, as well as the balance owing. As the above poster mentioned, this information usually isn't available at the POS(point of sale)register, but the CUSTOMER SERVICE computers, which are connected to the financing company, does have access to this information. This is where the "paper trail" can be obtained regarding the customer's purchasing history, line of credit, and spending habits. This information is normally kept on file for up to 5 years before it is archived. For those accounts which are in default, or missed more than three consecutive payments, a "red flag" is placed on the account, and the customer receives an automated phone call reminding them that payment is due, or necessary actions will be taken. I don't know about stores in the US, but that's how it's done up here in Canadam, at least where I work(a large national retail chain). NOTHING is private about your credit history or spending habits...

Just for the record, 90% of my sales are on plastic too...

[Brian]

Even if the credit card information is available, (kind of scary in itself) I'm still not a believer. You expect me to believe that in the slower/est time of the year for retail (not OCT-DEC) that firing employees is less effective than turning off lights to save money? In the scenario presented above it's not like the employees are helping any customers since nobody is in the store why bother with the lights? Maybe I'm just not wearing my tinfoil conspiracy hat today but "just plausible enough" does not cut it. I got this chain email from Microsoft and if I forward it to enough people they are going to pay me! Who wants in?

[the_economist]

I have two pieces of anecdotal evidence. I stopped at a motorcycle/atv/jetski
shop in Pensacola a couple of weeks ago. I asked the manager about business. He said it was a little slow...After he walked off, a sales guy that had overheard us came up and said they were absolutely dead. I also have a friend that is a 1/2 owner of a boat dealership in Orlando. He said he has only sold 2 boats in 6 weeks and both of those he packaged up and sent to Europe. They were purchased from their web site.

[Sarge6]

Not buying it. This guy is a big-box store middle manager, yet he's got the gods-eye, omniscient, vertical and horizontal view of his entire company's sales and supply and HR processes? His "post" is more like a perfectly constructed essay to poke its target audience right in the sweet spot: "I had a feeling we're about to go over the waterfall - now I know it."

Of course, what do I know? I can't exactly compare my own impressions, because I haven't been in a big box since Christmas. Just cutting back a little this year. . . .

[Groty]

Sounds like the retailer is deeply in debt, perhaps already facing liquidity pressures, and is trying to adjust to a consumer driven slowdown.

Too bad the retailer's name wasn't mentioned, it would probably be worth researching as a potential short candidate.

[simplenothing]

I also work for a major retailer, and can identify with a lot from that post. Our March comp sales were the worst we have had in many years, down almost 3% from last year. We've given up on making plan and are now losing the fight to make LY. For awhile, consumer electronics were supporting us, but now all departments are getting hit, especially women's apparel, home furnishings, even areas like jewelry and handbags, which had been strong a few months ago.

One difference, our company's management is lacking in their knowledge of the economy. Our CMO keeps saying how the economy should rebound during the second half. I just don't have the heart (or guts) to tell her that the downturn is just beginning.

[bob niederman]

You're a week late. April 1 was last Tuesday.

"When I do I sometimes process peoples credit card payments which lets me see how much they owe and how much they are paying." Sorry, but no, processing a credit card payment doesn't give you this info.

"Corporate has sent us emails telling us to make sure we fill bags to the absolute possibly maximum....Our distribution centers are sending us, for example, 3 of a certain item when normally we would get 50.... and they don't send us more until those sell...asked our pricing team to do a store mark down and lower the price on almost all of our TVs by 30-50%. "

So Corporate controls bag usage and inventory but some guy at some some store can just reprice *all* the TVs down by 50%?? I DON'T THINK SO.

Honestly, Mike, try a little harder, and next be on time for April Fools day

[Dave]

The retail information is quite plausible. The clerk obviously works at a store such as Sears which regularly processes people's monthly credit card payments - that is people go into the store to pay their credit card. Never done that?

[Industrial Engineer]

It's fascinating how many commenters don't want to believe that there is a big box retailer struggling to meet their profit targets due to lower sales (for whatever reason) and therefore is implementing lots of cost saving efforts. Or is the real issue that it's what's implicated by the post that is so disturbing as to engender skepticism?

[sts]

If you read the post carefully several clues emerge as to the scenario being described.

First: The guy mentions TVs and consumables at the same store. Near me the only stores that fit the bill are Walmart and Kmart. He also mentions top-3, so probably one of those 2.

Second: The guy mentions complaints about the air conditioner. Its Jan-March he/she is describing so probably Fl or AZ, and big city, so maybe Miami or Phoenix.

Third: As mentioned by others, the cost-cutting measures mentioned are reasonable in a consumer downturn. The poster seems to not have experienced one, so maybe he/she has been on the job for ten or so years.

Ok, so what do we have, a Walmart/KMart in Miami or Phoenix experiencing a big downturn? Is this so difficult to believe? Add an excitable, inexperienced manager and they story seems to make sense.

[roger pasa]

(Something Big OUT There)this is what I find objectionable and suspicious it is meant to stir the emotions and is intellectually dishonest it belongs in a tabloid not a serious blog anybody with half a brain knows the reactions of big Biz in times of stress and if this story is true or not is immaterial

[Mogabu]

There's a video on CNN videos now:
After being denied a loan, a woman pulls a gun on a bank teller and demands cash.

Sorry, I couldn't figure out how to obtain the link. The police chief makes some interesting comments.

[Tester]

Two quick observations:

The Malls in North Jersey are still packed on the weekends when i have to shop

I was rushed out of my table at a high end resturant last night in Manahttan (business function) after paying to make way for the dozens of people waiting for a table.

There may be cracks on the surface....but I am not sure they have hit the tri state area yet.

[CathyG]

If the post is real, it must be a regional phenomenon. Here in the Dallas/Ft. Worth area, stores are full, people are buying and there are help wanted signs at all levels of retail and food service. I have noticed some drop-off in traffic at the highest end restaurants, though.

[AZBill]

We have a new Lowes in our area (AZ), it opened right at the end of the real estate boom. The employees park near the Hwy. so people driving by know they are open. I have been in the store on weekdays when employees out number shoppers by at least 2 to 1. Big overhead + small sales = disaster.

I am sure once the $600. welfare checks are sent in May, there will be an uptick in retail sales. Or, maybe we will all just fill the gas tanks in our cars?

[just dug]

Sounds bogus to me but the sales numbers aren't out of line compared to where I'm working (consumer durables). Same store sales down 25% YTD, for a company that had 30% growth last year, entire company sales only up 2% YTD and dropping. 4th quarter last year same store were only down 8% so the rate of change is accelerating. All the vendors I've talked to have said everyone is slow pay now and their sales are all off around 10%.

In large companies there used to be people looking at ratio between pencils and yellow pads to track employee theft, so light bulb emails don't strike me as that odd in bad times. Those pennies add up to millions for large companies and the only reason not to target those types of expenses is concern about the financial viability message it sends to the employees you want to keep - and there aren't many of them in retail.