
The implosion of capitalism is reflected by the S&P 500 index. We can measure the change in S&P 500, year-over-year, and compare it with the year-over-year change in sales at the company we work for, year-over-year.
Let's use Gap as an example.
The image demonstrates a relationship (not perfect, but directional) between changes in the S&P 500 and Gap comp store sales.
If the S&P 500 drops by 20%, Gap comps drop by an average of 7%.
If the S&P 500 is flat, Gap comps drop by an average of 4%.
If the S&P 500 increases by 20%, Gap comps drop by an average of 1%.
The relationship only has an R-Squared of 31%. But this is good to know, folks!! It suggests that the economy is responsible for about 31% of the change in Gap comps, while issues controlled by Gap employees account for 69% of the change in Gap comps. In other words, Gap management plays a bigger role in the success of the brand than the economy plays.
Ultimately, this lousy economy drags Gap comps down by maybe six points.
As Executives, we have to communicate a message of hope to our employees. The goal should include a ten percent improvement, so that when the economy drives the business down by six points, we still achieve a four point increase. Improvement is achievable!
Every one of us can run this analysis for the businesses we work at. S&P 500 data is freely available, and our own annual sales performance (retail, online, telephone) is freely available. The x/y non-linear regression fitting software (Curve Expert) is freely available. Go analyze your business, and feel comfortable with the notion that you still control the destiny of your brand!