Shop Talk

Retailers, consumers and prices

Check Out Line: December sales fall short of expectations

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Williams-SonomaCheck out the U.S. government’s take on December retail sales, which totaled $352.99 billion.

U.S. retail sales fell 0.3 percent in December versus November, while analysts polled by Reuters had forecast a rise of 0.5 percent.

If you compare December 2009 to December 2008, sales actually rose 5.4 percent. Excluding autos, gasoline and building materials, sales rose 3.2 percent from a year earlier.

“Obviously the market was primed for a better recovery from the consumer,” said Boris Schlossberg, director of research at GFT Forex. “That’s going to be the story going forward — will (the) consumer be able to take over from the  government and replace demand that has come so far from  government spending. If the consumer is unable to do that, it’s going to pose some significant risks to the global recovery story.”

Check Out Line: Warning! Murky outlook ahead for retailers

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shop11Check out the latest outlook on October sales at U.S. retailers.

While most industry experts expect a 1.2 percent rise thanks to the weather gods and easy comparisons, the forecast doesn’t really say it all.

For instance, while sales trends have improved from a disastrous October 2008, data on the economy and consumer spending gives mixed signals and indicates shoppers remain cautious.

A brighter view doesn’t lead to increased spending

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paying-billAmericans may have become more confident in the economy but they haven’t started spending heavily again — and that could be bad new for retailers this holiday season.

Discover’s U.S. Spending Monitor for September rose for the second straight month, climbing 2 points to 89 (based out of 100).  Thirty-three percent of respondents said they felt economic conditions were improving, a Monitor high and a 2-point rise from August.

Check Out Line: Bringing back discretionary spending

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costco-shopperCheck out analysts’ calls on middle and upper income shoppers.

Thursday’s sales reports showed that some consumers have started to buy their little luxuries again, a trend retail industry experts say is crucial for sales to rebound this fall and winter.

Michael Koskuba, Portfolio Manager for Victory Capital Management‘s Victory Large Gap Growth Fund, recommended that investors look into discount names with a discretionary bent, such as Target, which he owns in his fund.

Shift FROM thrift? Are diners trading up?

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olivegardenAfter a much heralded “shift to thrift” during what has become the longest and deepest recession since the Great Depression, diners are now saying they plan to spend less money at cheap fast-food chains and more at some pricier eateries like Darden‘s Red Lobster and Olive Garden chains, Chipotle and Maggiano’s Little Italy from Brinker

“Trading up is supported by fewer customers saying they’re ordering less expensive items, skipping beverages and choosing less expensive restaurants,” RBC Capital Markets analyst Larry Miller wrote in a client note. Miller regularly polls diners about their spending plans. 

Consumers more confident, still not spending

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save-bigWhile more consumers feel better about the economy, they are not getting back to their spending ways, according to a survey released on Wednesday.

Discover’s U.S. Spending Monitor for August showed a rebound, with results rising to 87 (out of 100) from July’s 83.5.
 
A whopping 21 percent felt economic conditions were improving, marking a high for the monitor and up 7 points from July.  And, just over 21 percent felt their own finances were shaping up, marking the highest number reported since August 2008 (aka the month before the Lehman bankruptcy frazzled the markets).

Check Out Line: Is it Christmastime already?

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Check out some shoppers saving for holiday gifts.

santa-claus-on-the-beachYes, it is still summer, but a comparison shopping Web site decided to find out how recession-weary shoppers feel about spending for the upcoming winter holidays.
 
Just over 75 percent of respondents to PriceGrabber.com’s recent survey said they are more concerned about the cost of holiday gift-giving this year.  So, how many are starting to save earlier?  Only 41.1 percent.

Here’s a quick breakdown of the survey from PriceGrabber.com:
 
Compared to the 2008 holiday season, are you more concerned about the cost of holiday gift-giving this year because of the recession?
 
35.2% Yes, I am highly concerned
40.1% Yes, I am moderately concerned
24.7% No, I am not at all concerned
 
Are you planning to start saving money for holiday gift-giving earlier than last year because of the recession?

Check Out Line: Earnings-palooza!

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macys1Check out all the earnings in the consumer world.

Several retailers and food companies posted quarterly results, offering different views on where they stand in a recession that has consumers dialing back spending.

Macy’s posted a better-than-expected profit as it cut costs, but the department store operator’s new, higher earnings forecast shows full-year profit could still fall short of analysts’ expectations.

Check Out Line: Consumer spending shows a tiny rise

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cash-register3Check out a government report showing that U.S. consumer spending rose 0.3 percent in May after an upwardly revised flat reading in April.

It was the first gain in spending since February, as government stimulus pushed incomes higher.

Clorox’s recipe for the recession – stay home

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When people hunker down, apparently they eat more salad. 
 
salad-shoppingIt’s either that or they’re using Hidden Valley Ranch dressing on veggies or some other snack.  Despite it’s higher price – it sells at about a 40-50 percent premium to its rivals - the bottles are selling well in the downturn, Clorox CEO Don Knauss said on Thursday.  Yes, the company that brightens your whites also sells white dressing. 

Incidentally, we chatted with Knauss while he dined on a salad served with, you guessed it, Hidden Valley Ranch.
 
While some shoppers are laser-focused on saving, overall Americans still want what they want when they want it and they’re willing to pay.  The recession may have changed some mindsets, though.

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