Monday, January 14, 2008

The 2008 American Consumer Preview

The 2008 consumers are unlike last years consumers, as we are battle weary, scared of the economic stability of our communities and our country, and wondering what will become of all the issues being talked about by the presidential hopefuls.

Yet, month after month, consumers have to stretch their incomes a little further and buying decisions are being made as individuals and families. As Americans we want to be optimistic and as I do my job, I am always encouraged by those that are starting new businesses and chasing after their dreams.

The following report about the 2008 consumer came in my email today:

It's Official: Consumers Are Sucking It In Retailers turned in December sales reports that were somewhat more disappointing than expected. And experts say the results don't just sum up a lousy holiday period -- they're predictive of a newly cautious consumer.

Middle-of-the-road department stores were hit hardest, with Kohl's same-store sales falling 11.4 percent, Macy's sliding 7.9 percent, and JCPenney dipping 7.5 percent. Even high-end luxury stores, which have been strong performers, struggled: Nordstrom says its sales fell 4 percent, and Saks eked out a gain of 0.8 percent. (Same-store sales at Neiman Marcus posted a 2.9 percent gain.)

Specialty apparel retailers are also wrestling with much weaker numbers. Same-store sales at Chico's sank 13.7 percent; sales at the Limited Brands, which includes Victoria's Secret and Bath and Body Works, fell 8 percent; and at the Gap, which includes Old Navy and Banana Republic, as well as Gap stores, sales slid 6 percent.

For teen retailers, Aeropostale was a standout with a 12.2 percent gain, but sales at both Abercrombie & Fitch and American Eagle Outfitters fell 2 percent, and sales at Hot Topic dropped 6.2 percent.

Wal-Mart was an unexpected bright spot, posting a comparable-store gain of 2.7 percent at the higher end of its forecast. But Target, just a day after announcing the retirement of its CEO, says its same-store sales dropped 5 percent in December.
Overall, December same-store sales growth managed a gain of just 0.2 percent from the prior month and last year, according to TNS Retail Forward, a Columbus, Ohio-based consultant that tracks about 50 key retailers.

To a degree, the weather was a major factor, says Weather Trends International. "This five-week retail calendar (Dec. 2-Jan. 5) was the third-coldest in 15 years and the snowiest in seven years," it says, "bringing major disruptions to the critical holiday shopping season." But the real villain seems to be the economy. "The retail numbers leave little doubt that shoppers are in belt-tightening mode," TNS Retail Forward says in releasing its index. "No part of retail spending is immune right now. From stores to online retailers and lower-income to higher-income shoppers, there are signs of weakness that will persist into 2008."

Shoppers included in its ShopperScape survey, fielded in the week between Christmas and New Year's, say they spent $635 on average this year, compared with $710 last year. Fewer shoppers (82 percent versus 88 percent last year) say they shopped online for gifts, and the percentage of online purchasers also declined a bit, to 77 percent from 80 percent.

Gift cards, which retailers count on to spur January sales, also disappointed. About 56 percent in the ShopperScape survey say they received cards, compared with 58 percent a year ago. And the average amount on the cards declined, too -- to $124, from $136 last year.
(Source: Marketing Daily, 1/11/08)

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