By Marek Fuchs
While many eager eyes fell upon Apple's (AAPL) World Wide Developer's Conference this week, Piper Jaffray’s (PJC) Consumer Conference this Wednesday and Thursday has been the recipient of far less buzz.
But don’t fall for the temptation to follow this convention on conventions. Apple’s ability to turn the world on end with dazzling new pieces of hardware may be a thing of the past. Moreover, the consumer economy is currently flashing such contradictory signs that an assembly of dozens of names from a cross section of industries – restaurants, retailers and even gyms – holds some compelling possibilities.
Yet the difference in public perception for one of the week’s big conferences (which also includes the E3 videogame convention) is almost comical. In the prelude to Apple’s conference, we, of course, had the rumormongers. During the presentation, everyone and their grandmother was live tweeting. Afterward, we were treated to headlines such as this one from The Daily Beast: 20 Life-Altering Developments Just Announced at Apple’s Life-Altering Worldwide Developers Conference.
And, no, this was not a tongue-in-cheek sentiment but a completely earnest treatment of Apple’s prospects. That’s not how it rolls over at the consumer conference. But the kind of traders capable of moving markets are currently laying the likes of Gap (GPS), Kirkland (KIRK), Nordstrom (JWN), Urban Outfitter's (URBN) and Wet Seal (WTSL) alongside each other to see if maybe – just maybe – they can get a bead on the confusing direction of the consumer sector.
To date, for each positive statistic about the consumer economy, there has been a separate but equal negative statistic. There has rarely been a time when good and bad signals about the state of the consumer were in such close quarters.
You ready for whiplash?
Housing prices keep creeping up, at least while interest rates hold. General Motors (GM) and other automakers have been moving cars at a good clip – more than 15 million a month in six out of the past seven months, a benchmark not hit since 2008. Retail sales contracted in March but rose in April. The rise, by order of 0.1%, was unexpected but obviously not resounding.
Consumer confidence in May stood at a five-year high but consumer debt levels rose during the holidays. Is that a signal of confidence or the return of a delusional state? Besides, as recently as March, confidence numbers were deplorable.
Through it all, Gap (which was Yahoo! Finance's company of the year for 2012) has regained a sense of where it stands but still has issues, including its supply chain and the resulting impact on margins, as well as the public perception of how humanely Gap treats foreign factory employees.
The issue of ethical sourcing has been a gathering concern of customers and may have a long-term impact on companies such as Gap and Wal-Mart (WMT). With a recent spate of fires in India, which even impacted a Coke (KO) depot, consumer and worker’s rights groups are engaged. This is in the early stages but it would pay to gauge whether consumer companies sourcing in India and China are addressing any of these concerns, or merely plowing ahead. At the conference Wednesday morning, Gap spoke about a grab bag of strategies to streamline their supply chain but ignored the public perception issue.
On the more immediate macro-issue, Glenn Murphy, Gap’s chairman and CEO, said 2013 would be decent, if bumpy: “Looking like a normalized year with the usual level of distractions, but no Great Recession.”
Will the sum total of perceptions garnered from the Piper Jaffray conference provide direction that statistics have not? It’s possible. The “consumer sector,” as it is termed, is painted with a broad brush-stroke. With companies from so many fields where consumers spend money, the conference offers conversation from as good a cross section of players as you’ll see under one roof at this time of year. There still might not be iron-clad certainty about where the economy is turning, but a reputable consumer conference is as good a place as any to dust for clues.
With modern SEC rules, there's less of the whispering in breakout sessions that used to move stocks on the heels of conferences, but even gauging how hopeful or beleaguered a CEO looks often does more than a second-hand economic statistic can. During last year’s conference, for example, Ron Johnson, JC Penney’s (JCP) ill-fated CEO, left his luggage in the back of his limousine; when he spoke, he also looked under-dressed and out of place. Quite an omen, that.
This conference, to its credit, also strives for something a little risky and different. This is something you won’t likely see at an Apple conference, at least in this lifetime. For example, Piper Jaffray is featuring a panel of teenagers from Northern Highlands High School in Allendale, New Jersey, to tell the stuffy old folks – with their notions of what is and isn’t selling – what’s really going down. Perhaps the most enlightening dialogue here will come from the mouths of babes.
Marek Fuchs was a stockbroker for Shearson Lehman Brothers before becoming a journalist who wrote The New York Times' County Lines column for six years. Fuchs speaks regularly on business and journalism issues at venues ranging from annual meetings of the Society of American Business Editors and Writers to PBS to National Public Radio. His recent book, "Local Heroes: Portraits of American Volunteer Firefighters," earned widespread praise. He is on the writing faculty at Sarah Lawrence College. When Fuchs is not writing or teaching, he serves as a volunteer firefighter. You can contact him on Twitter: @MarekFuchs.
- Piper Jaffray