Monday, July 30, 2012

Do people buy more clothes & shoes during the Great Singapore Sale?

Singaporeans love shopping, and that is a fact that needs no proving here.

It comes to no surprise, then, that sales of shoes and clothes shot up 13-15% during the 2011 Great Singapore Sale, compared to the two months before and after.

Does the Great Singapore Sale (henceforth termed "GSS") really boost sales, or is it school holidays or mid-year bonuses driving purchases?

To answer the question, I compared sales in 1993, the year before the GSS was introduced, against sales in 1994, the year the GSS was introduced. If the GSS really helped boost sales, GSS sales would be not only higher than that during the months before and after the GSS, but also more so in 1994 than in 1993. Think of 1993 as our "control" for 1994 sales, like a clinical trial.

The Department of Statistics' Retail Sales Index provides lots of useful information for this exercise. Since this is an index, sales are not measured in $ dollar terms, but as a percentage another period's sales. For example, I've set Apr - May sales in each year at "100". This means that if sales during the GSS period are "105", sales are 5% higher than in Apr - May. If sales during Aug - Sep at "95", sales have fallen 5% compared to Apr - May.

One other thing. The Index is measured in "constant prices", which means purchases are adjusted for prices. If prices are 5% lower than the base period's, the index will bump sales up by 5% to compensate. This is important because clothes and shoes are cheaper during the GSS.

Now that these nitty-gritty details are out of the way, we can look at the results. First look at the blue bars - these represent sales in the months before the GSS months, which is in turn shown by the red bars. If the red bars are higher than the blue bars, sales have gone up during the GSS period.

In 1994 (the middle part), sales went up 15% during the GSS as compared to the two months before (again, red bar vs blue bar). Does this mean the GSS causes people to spend more? Not really, because if you look at the data for 1993 (recall: our control group), sales also rose, only a tiny bit less at 13%.

We can compare the red and green bars in similar fashion as the green bars depict sales in the months after the GSS. Again, we see no evidence that GSS promotes sales - in both cases the red bar was 4% higher than the green one (remember that 1994 should be much higher than 1993 if the GSS had an impact).

One might argue that 1994 was only the first year, and that the GSS didn't really catch-on then. Well, if you look at the second year, 1995, GSS sales was practically the same before, during, and after the GSS.

In a nutshell, there doesn't seem to be any evidence that people buy more stuff during the GSS. Perhaps shops already had summer sales before the GSS, maybe sales were never good enough, or maybe only ugly things go on sale. Admittedly, I used data from almost two decades back, so maybe things have changed today. In any case, hope you managed to find some good steals from the last GSS!

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