Shop Talk
Retailers, consumers and prices
Check Out Line: NRF says Americans plan to get their pumpkin on
Check out the spending boost planned by Americans for Halloween.
The National Retail Federation said spending by the 148 million Americans who partake in the “spooky” October holiday is expected to surge almost 18 percent this year as revelers look for any reason not to think about high unemployment and a shaky housing market.
“In recent years, Halloween has provided a welcome break from reality, allowing many Americans a chance to escape from the stress the economy has put on their family and incomes,” NRF CEO Matthew Shay said in a statement.
“This year, people are expected to embrace Halloween with even more enthusiasm, and will have an entire weekend to celebrate since the holiday falls on a Sunday,” he added.
Americans will spend an average of $66.28 on costumes, candy and decorations (or a total of $5.8 billion), up from last year’s average of $56.31. However, that is still short of the $66.54 spent in 2008, according to the study conducted by BIGresearch for the NRF. Retailers love Halloween because it comes between the back-to-school and December holidays in luring consumers into stores.
Those selling the latest costumes have reason to be the happiest as four out of 10 people are planning to get dressed up, up from 34 percent last year, according to the survey. And in a related note almost 12 percent will dress their pets too!
A third of those polled will throw or attend a Halloween party, almost three-quarters plan to hand out candy and about half will carve a pumpkin as well as decorate their house or yard, according to the study. In addition, 21 percent will visit a haunted house and 32 percent will take their children trick-or-treating.
Check Out Line: Surprise, surprise, a discount retailer is doing well
Check out the strong quarterly profit at discount retailer Dollar General.
The company, which prices most of its merchandise below $10, posted a stronger-than-expected profit thanks to bargain-seeking consumers who spent more per visit. Company executives talked of building sales momentum during the quarter and sales results in the current three-month period were encouraging.
As a result, Dollar General, which has received a boost from high U.S. unemployment rates, raised its full-year earnings forecast.
U.S. consumer spending rose in July at the strongest pace in four months, offering hope that consumers will be able to keep contributing to a modest economic recovery.
Meanwhile, overseas the message was mixed as Carrefour, Europe’s top retailer, said the summer sales trend was mixed in Europe but demand was holding up in emerging markets. Company executives acknowledged sales trends in Europe in August were slightly disappointing after a satisfactory July.
French luxury goods group Hermes posted a 52-percent rise in first-half operating profit, boosted by leather goods and slightly raised its full-year financial targets, while in Australia retail sales were surprisingly strong in July, suggesting the economy there looks solid.
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Check Out Line: Frugality — Part Two?
Check out the apparent return of the frugalista.
Worries about stubbornly high U.S. unemployment and a tempermental economic recovery has shoppers reeling in spending on all but the essentials.
The 28 retailers tracked by Thomson Reuters reported an overall 2.9 percent rise in July sales at stores open at least one year, missing Wall Street forecasts of 3.1 percent. Seventeen of those retailers reported lower-than-expected sales, while nine — including Macy’s and Kohl’s — beat estimates.
“We are now in an environment where the dollars in consumers’ pockets are fewer, so the competition for those dollars has increased,” said Lawrence Creatura, portfolio manager at Federated Clover Investment Advisors.
U.S. consumer sentiment hit its lowest level in nine months in July on bleak prospects for jobs and income, according to Thomson Reuters/University of Michigan’s Surveys of Consumers. On Thursday, the government reported that new U.S. claims for unemployment benefits unexpectedly rose in the latest week.
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Barnes & Noble draws interest, but a tough sell
Check Out Line: Have a Coke and a confused looking grin
Check out the confused American consumer.
Coca-Cola Co actually saw sales volume rise in North America in the second quarter, a rare feat.
Now imagine what would happen if U.S. consumers could actually figure out if they can afford to keep spending the money on a soda, what with high unemployment and the jittery stock market.
The world’s biggest soft-drink company says it has the brands to grow in North America, the ability to spend to support those brands and other factors.
But one quarter of growth is not enough to make the folks in Atlanta jump for joy.
“The consumer is still confused in the United States,” CEO Muhtar Kent said during a conference call with analysts.
“There’s still confusion out there in terms of the consumer spend levels, but we are moving on the right path. That’s the key message here,” he said.
Check Out Line: Joe High School may have reason to envy younger siblings
Check out back-to-school spending trends. Joe High School may have every right to be jealous of his younger siblings during this back-to-school shopping season, according to a survey conducted by PriceGrabber.com, a part of Experian. Consumers plan to buy more gadgets — laptop computers, cell phones and other accessories — for elementary school students, almost doubling spending in some cases, while the rate of growth is expected to be lower if not negative for many high schoolers, according to the “Back-to-School Shopping Consumer Behavior Report.” “Laptops and other electronics are the most expensive items on most back-to-school shopping lists. The increase in gadgets purchased for elementary school students has forced parents to increase the overall budget at an earlier age,” Barbary Brunner, chief marketing officer at PriceGrabber said in a statement. “However, the survey data implies that while some parents are purchasing laptops and electronics for high school students, other parents are forgoing the purchase of the latest and greatest new technology for high schoolers who already have late-model devices,” she added.
Meanwhile, 45 percent of those surveyed will spend the same amount as last year on back-to-school shopping and 14 percent will spend more, according to PriceGrabber.
Two leading U.S. retail industry groups previously said parents and students will be spending more this year on back-to-school items. The number of consumers buying their wide-eyed elementary-aged child a laptop is 15 percent, up from 7 percent last year, while plans to purchase a cell phone hit 10 percent from 6 percent last year, according to the PriceGrabber study. The laptop purchase rate for high schoolers rose, but to a lesser degree, going up to 25 percent from 22 percent last year, according to the study. And forget cell phones as that rate fell to 12 percent from 15 percent last year. High schoolers (9th through 12th grades) also come up short in the budget planning as only 50 percent of consumers surveyed plan to spend more than $250 on that group, compared with 52 percent for elementary kids (kindergarten through 5th grades), 62 percent for middle schoolers (6th through 8th grades) and 67 percent for college and junior college students, according to the study. The survey was conducted online from May 12 to June 1 with 1,718 consumers.
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Hasbro quarterly revenue falls short
Check Out Line: Retailers need to step up the sucking up to consumers
Check out an American Express survey that shows that quality service matters more than ever, suggesting U.S. retailers may want to start sucking up to recession-wary consumers even more. Sixty-one percent of Americans polled said quality customer service is more important in today’s tough economy and that they will spend an average of 9 percent more when they think a company is providing that. Important points when some analysts and investors worry the economy may be at risk of dipping back into recession. In a disconnect, however, many businesses seem to be missing the message as 28 percent of those polled believe that companies are paying less attention to good service and 27 percent have not changed their attitudes, according to the American Express Global Customer Service Barometer (which sounds like a weather vane for customer service). “Customers want and expect superior service,” AmEx executive vice president Jim Bush said in a statement. “Especially in this tight economic environment, consumers are focused on getting good value for their money. ” “Many consumers say companies haven’t done enough to improve their approach to service in this economy, and yet it’s clear they’re willing to spend more with those that deliver excellent service – suggesting substantial growth opportunities for businesses that get customer service right,” he added.
Retailers might want to keep all that in mind given the fact that June same-store sales came in slightly below expectations and some analysts see the sector treading water. The survey was conducted in the United States and 11 other countries. In the United States, nine in 10 of those surveyed consider the level of service important when deciding to do business with a company, the survey said. However, only 24 percent believe companies value their business and will go the extra mile to keep it. Contrary to “conventional wisdom,” the survey showed more are inclined to talk about a positive experience (75 percent) than complain about a negative one (59 percent). And consumers said they are far more likely to give a company offering good service repeat business (81 percent) than they are to never do business with a company again after a poor experience (52 percent), according to the poll. However, negative feedback online weighs more heavily as almost half of consumers gather others’ opinions about a company’s customer service reputation and they put greater credence in negative reviews (57 percent) versus positive ones (48 percent), according to AmEx. “Because consumers can broadcast their views so widely online, each and every service interaction a company has with its customers becomes even more crucial,” Bush said. “Developing relationships with customers, listening to them, anticipating their needs, and resolving any issues quickly and courteously can help make the difference.” In fact, 81 percent of Americans have decided never to do business with a company again because of poor customer service in the past, the poll said. Half of those surveyed said it takes two poor service experiences before they stop doing business with a company. However, 86 percent will give a company a second chance after a bad experience if they have historically had great service before, according to the poll. Woe to those who screw the experience up too, as 52 percent of consumers expect something in return after poor service beyond just resolving the problem. Seventy percent want an apology or some form of reimbursement. So retailers, I expect red carpet treatment and a lot of sucking up this recession or you won’t get any of my limited funds!
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Chrysler launches money-back guarantee
Hain Celestial to name two Icahn nominees to board
Study: Living Near Restaurants Makes You Fat (Wall Street Journal)
Industry Places Bets on back-to-School (WWD, subscription required)
Check Out Line: Would you like some wine with that weak economy?
Check out the latest poll on affluent consumers’ spending habits.
Affluent consumers around the world may be worried about the economy, but they are still spending on items they value most: food, wine and dining out, according to a study released by HSBC Global Pulse.
Seventy-two percent of those polled said the amount of wine they drank had not changed in the past year, while 67 percent said their spending on wine was unchanged, HSBC said.
Meanwhile, 73 percent still dine out nearly once a week and 39 percent still eat at restaurants at least three times a week, according to the study.
Of those polled, 80 percent have household income above $100,000 and 19 percent are above $250,000, according to HSBC. Fifty-seven percent are college grads and 43 percent have post-graduate degrees.
That’s not to say these consumers are unaffected by the weak economy as the most important criteria (95 percent) in wine purchases is “value/price,” according to HSBC.
Fresh food and well-known brands also scored well. Seventy-nine percent said they are willing to spend more for locally grown products, 62 percent would spend more for organic foods and 82 percent would spend more for well-known brands, HSBC said.
Check Out Line: A better house for tomorrow
Check out the renovations being planned by U.S. homeowners this year.
According to an American Express Spending & Saving Tracker poll, 62 percent of homeowners plan to tackle remodeling and renovation projects in 2010 to improve their home’s appearance and value (the top two motivators, respectively). However, many (53 percent) also believe a return to a seller’s market in real estate is not expected for two or more years.
Even with the soft housing market, 85 percent of homeowners consider their home as their most valuable asset and will spend an average of $6,200 to enhance it, according to the monthly study.
“It’s clear from this month’s survey findings that Americans’ most prized possessions are their homes and they are committed to continuing to enhance its appearance and value in spite of the softer real estate market,” Pamela Codispoti, American Express senior vice president and general manager of Cardmember Services, said in a statement.
“However, Americans are doing so in a responsible way by funding projects within their financial means. This signals that consumers are following through on their previously stated intentions to exercise more financial discipline in 2010 as it relates to home improvement,” she added.
Most (about 70 percent) will finance their projects with money on hand and employ a variety of resources to complete the projects — contractor (47 percent), family and friends (38 percent) and doing it themselves (14 percent), — the poll said. Interiors (53 percent) will receive the most attention.
Many still think it a buyer’s market as 52 percent of the general population are not confident they could get their asking price, according to the poll. However, 79 percent would not be willing to come down on price to seal the deal.
Check Out Line: February sales strong despite snow
Check out the return of the shopper. Even at Abercrombie & Fitch.
Several U.S. retailers showed off strong sales gains — albeit over an ugly February 2009 — despite the winter storms that bashed the Northeast, mid-Atlantic and other parts of the United States.
It’s too early to declare a major rebound yet, analysts said, but the sales gains signal that consumers are heading back to stores for more than just the essentials these days.
“We are not in full recovery mode, in my opinion, nor is the weak economy over,” said Hexagon Securities Managing Director Doug Conn. “But we are definitely starting to climb out of the hole that we dug ourselves into in late 2008 through 2009 … We have a lot further to go to get back to a healthy economy.”
The Thomson Reuters same-store-sales index rose 4 percent in February, topping expectations of a 2.9 percent increase and a year-earlier drop of 4.7 percent. It was the best February since 2005, when same-store sales rose 5.7 percent. Check out this
“Counter to what you are seeing from a consumer confidence reading perspective … I think people are feeling generally a little bit better about things and as a consequence are starting to open up their wallets,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
The biggest surprise jump in sales came at Abercrombie & Fitch, which finally started discounting a few months ago after seeing competitors attract teens with their deals.
Deals and discounts in vogue this Valentine’s Day
As procrastinators (or those who were too busy shoveling last weekend) head out to find a perfect last-minute gift, they may be happy to hear that less is expected this Valentine’s Day.
Most consumers in romantic relationships don’t plan to spend much, if anything, on Valentine’s Day gifts, according to a new survey from Accenture. That backs up the findings from a National Retail Federation survey, which found that U.S. couples planned to spend 6 percent less on each other this year.
Most respondents in Accenture’s survey said they only planned to spend up to $50 on gifts. Nearly 13 percent of women and 5.5 percent of men said they planned to spend nothing. Kiplinger has some ideas for them.
Those who are buying may be more practical, as they fret about home prices, stock portfolios and job security.
“If there were a year that you would get your wife a small appliance with a dozen roses, this might be the year,” said Thomas Jacobson, global leader of Accenture’s pricing strategy practice.
Eighty-one percent of women and 66.9 percent of men said a discount or sale would be the most likely thing to influence them to buy a luxury item as a Valentine’s gift. Most people plan to buy items such as flowers, candy or cards.
Those hoping for a warmer reception from a luxurious item can also splurge less without losing favor.
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Resident Shop Talk Expert
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