Summary: Analysis of Web 3.0 data has lead me to conclude that Q4 retails sales in the UK will not be spectacular since High Streets are not experiencing enough foot traffic. This increases the chance of return to recession. These methods are as yet untested. (Note a month later this was confirmed)
Well I have never actually used my work with twitter and foursquare to make predictions about economic activity. But his year will be the first. So far in the UK retail sales for Q4 have been off to a fairly slow start. This makes the last week before Christmas and the Boxing day sales so critical.
So what you may ask? Well its this simple: a certain roughly fixed percentage of any population is compulsive tweeters. As they move through a place like London they are checking in to Foursquare which is then tweeted, they are posting photos, or just answering tweets. So in any large crowd of people you get a certain tweet buzz that can estimate the size and/or enthusiasm for the crowd. This buzz should correlate with the level of sales conversions, though this is still untested.
Also a busy shopping seasons means long lines. People often pass time in line on their smartphones, which would mean even more tweeting. So we would expect a massive shopping weekend before Christmas to see much higher levels of tweeting from this area than usual, which is precisely what we are not seeing.
Based on this evidence, and with the full understanding that this is a new science, the Web 3.0 Lab is prepared to make an estimate that Christmas sales will be lower than hoped for, and given the economic data published so far we are anticipating a return to recession in the end of 2012.
This conclusion comes from more than just Web 3.0 analysis. I have been asking cab drivers in London how the economy is doing and they universally state it is getting worse (granted that is not a scientific study), but what is obviously and can be confirmed by anyone is the large number of free cabs driving around London.
January 12 2012, first indication the UK economy contracted in the last quarter of UK.
CONFIRMED: January 9th 2013. If has been confirmed that that in-store retail sales in the UK actually feel in 2012 from 2011 Holiday season, so my prediction was correct. Retail sales overall grew by over 1% but that was due entirely to an almost 18% rise in online sales. My models use social networks to track activity on high streets, so my prediction turned out to be correct as to high street. (source)
What my model didn't include was just how much e-commerce is impacting high street sales. Much of the weakness I saw on London's high streets were economic gloom, but much of it wasalso people avoiding the high streets and the bad weather to shop online. Over the coming years I will need to include a factor to capture traffic lost from the high street to online sales to predict larger economic impact.
Alos the wake up call to retailers is pretty strong: they need to strengthen their connection between in-store and online to survive.
Though it has been confirmed that high street Christmas was weak in the UK, it is possible that retail online could have been strong enough to keep the UK out of recession. Which leads to an important triumph for those of us long in the Internet: if the advanced economies are going to grow they need to get most of that growth online. The dot bomb is long long a silly chapter in the history of investor ignorance, the Internet has triumphed.
UPDATE January 6 2013. New information coming out about a contraction in UK service sector has raised fears that a double dip recession has taken place. My prediction over the week running up to Christmas used twitter and foursquare social media to predict the status of the economy. I compared the London hight street levels of tweeting, foursquare checkins and the discussion on twitter to Mall of America. My assumption is that the US continues to have a solid, is somewhat subdued recovery. Comparing the trends in London with history and with the Mall of America my conclusion was:
- Activity on UK high street was significantly subdued.
- There was not a lot of engaged consumer tweeting.
My conclusion was that the UK had a weak retail Christmas in 2012 and this likely caused the returned to recession. The evidence is starting to come it right now. If my work is correct it opens up the possibility of using social media to get weeks of advanced notice on economic trends.
UPDATE: December 30 2012. To sum up, my prediction was based on the low level of tweeting in the London high street and the lack of enthusiastic tweets about shopping compared to Mall of America in the United States I anticipated a weak year for consumer spending in the UK over Christmas 2012. Data by the consumer association Which? confirms that consumer spending was down in 2012 holiday over 2011. Keep in mind this is one of the first years I have been able to track this kind of data, and my analysis was rather subjective. But it was pretty obvious looking at the days before Christmas that tweeting levels from London's high streets were nothing compared to previous major events, and that people were simply not tweeting much about shopping like they were in Mall of America.
UPDATE December 24 2012. We have not seen any surge even up to Christmas in the level of traffic or the intensity of what I would call consumption related tweets in main retail areas of London. This contrasts significantly with my work looking at Mall of America, where I am seeing many more tweets about shopping and purchases. Data coming in via other marketing research appears to be conforming my conclusion that the UK retail sector has suffered something of a Black Christmas
|5 days of Foursquare Checkins at Liberty in London|