Shop Talk

from Raw Japan:

Retailers do well by going cheap

Japan is back in deflation, and price falls look like gathering pace as shoppers' bargain-hunting leads stores to cut prices further to weather the worst retail slump in decades.

Retailers large and small reported hard falls in quarterly profits last week, and the few bright spots were focused on those drawing in thrifty shoppers with their cheap but well-made goods.

Fast Retailing tops the list, as its Uniqlo stores thrive in tough times by selling T-shirts for $10 -- that's cheap here -- and other clothing at similar bargain prices. The company is also seeing strong sales growth at its other basic apparel chain g.u.

g.u., the cut-rate sibling of already-cheap Uniqlo, had a low profile for years but shoppers started flooding in after it slashed prices across the board and started flogging $11 jeans and $5 T-shirts this year.

Check Out Line: Consumer spending shows a tiny rise

Check 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.

from Raw Japan:

The sweet spot

Amid the nagging cavity for consumption created by the global financial crisis, at least one sweet spot has emerged for the world's No.2 economy -- sales of cakes, candies and confections. Ignore turnover of luxury designer items, any kind of car or home, or basically most of Japan's recession-plagued output, and turn instead to sugar by-products, and you'll find the nation deep in a 25-month bon-bon bonanza. Shoppers, not just at Krispy Kreme Doughnuts, are waiting 30 minutes or more with a department store rep telling me that since March last year, sweets are the top selling food segment. "There is a line all the time, even on weekdays," said Kayoko Shibata at Mitsukoshi department store in Tokyo's upscale Ginza shopping district. "Almost everyday, the shop runs out of stock by late afternoon," she added. Pastry chefs even hooked up with designers to create some outlandish products for a Tokyo candy catwalk last week. What does all this say about the generally bitter consumption slump overall? Perhaps more individuals are now indulging themselves at home, rather than eating out, also cutting down on big ticket spending while finding solace in saccharine or sugary delectables. "Sweets are one way of making time at home more enjoyable," said Takashi Iida, who manages the sweets section at Matsuya department store in Ginza. Photo credit: REUTERS/Yuriko Nakao

Check Out Line: Of incomes, spending and jobs

Check out more signs of consumers being put in a vise.
 
Personal income rose 0.1 percent in June, the Commerce Department said. That was the lowest rise since April 2007.
 
And in fact, if it were not for the economic stimulus checks some consumers received in June, disposable income would have shrunk, the department said.
 
Meanwhile, costs continued to rise. The personal consumption expenditures price index — an inflation gauge — rose at its highest year-over-year pace since May 1991.
 
Consumer spending rose 0.6 percent in June, but actually fell 0.2 percent accounting for inflation. So consumers are spending more to get less.
 
Oh, and one more thing on the gloomy economic front, Challenger, Gray & Christmas Inc said planned layoffs at U.S. companies rose 26 in July from June.
 
Also in the basket:
 
Retailer Boscov’s files bankruptcy, may be sold
 
Walgreen July same-store sales up
 
Burani says investor eyeing bid for 15-18 percent stake
 
Calvin Klein’s latest controversy (WWD)

(Photo: Reuters)