Dan Sweet

Slickdeals as a proxy for retailer desperation?

I am a finance guy.  I love a bargain.  Hence I use Slickdeals.net.  For those not familiar, the site is basically a forum of bargain shoppers who share “slick” deals that they find.  The deals are all user generated and the very best bargains are promoted to the front page of the site.  In recent months I have noticed an increase in the number of details that are being promoted to “front page” status.  Below is the data from June to November comparing 2008 vs. 2007:

Increasing retailer markdowns?

Have the number of extreme retailer markdowns dramatically increased?

My first thought is that maybe the traffic at Slickdeals has grown significantly in the last year and this has led to a larger user base that is contributing more deals.  More deals means more “front page worthy” deals.  However, a quick look at Alexa.com for the traffic stats over the last 15 months, reveals that except for a spike for holiday shopping, traffic actually appears to be falling.

The only remaining explanation would be that the standards for promoting a deal to the front page may have been reduced.  This is a possibility and not something I have any insight into.  Based on my limited experience with the site, I know that getting a deal promoted to the front page is considered very desirable.  Users seems to keep a close eye on the mods and will often complain if a deal doesn’t seem “front page-worthy.”

ASSUMPTION: Standards for front page deals haven’t fallen.
CONCLUSION: Retailers are getting desperate.

n=1  Perry Ellis announced this morning that they were cutting their forecast from $0.50 per share to $0.30 per share based on the level of retailer markdowns they were seeing.

I expect they aren’t the only company seeing retailers take these markdowns.  I’ll be keeping an eye on Slickdeals as a leading indicator of retailer markdowns.

I’d love to hear any thoughts on this analysis.  Comment below!