Retailers, consumers and prices
Check out a new survey on back-to-school shopping.
More than one-third of consumers plan to spend less when they shop for school this year, according to a survey by market research firm NPD Group.
Okay, many consumers may have already started, or even finished, their back-to-school shopping. And several back-to-school surveys came out last month from the likes of the National Retail Federation and consulting firm Deloitte that also showed signs consumers were cutting back.
(Actually, NRF broke its survey into two and showed that college kids were cutting back, but that younger students and their parents were planning to spend more. But that’s another story.)
NPD’s Marshal Cohen said the NPD survey is more current and is taken closer to when consumes will actually shop for school.
“On a good year, 25 percent start (shopping) and none have finished at the end of July,” Cohen said. He also noted that consumers have pushed the back-to-school season further and further back, waiting until the weather cools before buying apparel.
So, in this latest survey, NPD shows 35 percent of those surveyed plan to spend less on back to school and 34 percent plan to spend the same as in 2007.
Most plan to shop at discounters, but that percentage dropped to 81 percent from 84 percent. Office supply retailers continue to show more popularity, with 45 percent of those surveyed planning to shop at the Office Depots and Staples of the world, up from 43 percent in 2007.
Footwear stores fell 5 percentage points to 22 percent of consumers saying they were likely to shop at those outlets, with apparel stores down to 16 percent from 20 percent in 2007.
And that old backpack might just have to make it through another year. Only 33 percent of those surveyed plan to buy new school bags, down from 45 percent a year earlier.
According to Standard & Poor’s, which put out its own back-to-school study on Wednesday, about 75 percent of back to school spending occurs in the four weeks leading up to the first day of school, or during August. But many high school and college students wait until school starts before buying clothes so that they can see what is cool first, S&P said.
Also in the basket:
Wal-Mart profit up 17 percent, says consumers pressured
July CPI rise higher than forecast
Borders larger rival unlikely to make a bid (WSJ, subscription required)
Check out the fading influence of tax rebate checks.
Tax rebate checks helped boost June retail sales but their influence appears to have petered out by July, according to data released by the Commerce Department on Wednesday.
The figures showed that total sales at U.S. retailers declined 0.1 percent in July, which was in line with forecasts made by Wall Street economists. A big reason for the drop was a fall off in auto sales. Auto and auto parts sales fell 2.4 percent in the month, their biggest drop since April, and were off a whopping 10.5 percent from year-ago levels.
Check out how bad retail sales can actually mean good earnings.
It all comes down to inventory management. Retailers have aggressively cut inventory levels in order to cope with the slumping economy.
The bad news resulting from that strategy came last week when many retailers posted disappointing sales, in part because they had less goods on hand to sell.
“Our inventory levels in … clearance and transitional categories were significantly lower than last year, affecting sales results, but leading to improved gross margins,” Kohl’s Chief Executive Larry Montgomery said in a statement.
But the good news could come over the next several weeks, when retailers report second-quarter earnings. Those slashed inventories should have helped them preserve margins, which help profits.
So it’s not like the U.S. consumer is buying that much. But at least retailers didn’t get left with shelves of unwanted inventory.
Also in the basket:
Giant retailers look to sun for energy savings (N.Y. Times)
InBev seen posting modest profit growth in Q2
(Due to a tabulation error in the research, STORES Magazine has issued a corrected list. This is being corrected to remove Coldwater Creek from the Top 10 list and replace it with Citi Trends at No. 10)
Though the retail industry cooled last year to its slowest growth since 2002, a number of retail companies experienced fiery growth, according to the National Retail Federation. The hottest retailers, in general, grew through acquisitions, according to the trade group’s STORES Magazine.
While the email’s introduction sounds like a missing line from Sinatra’s “My Way“, it goes on to plead for patience. Humility is in fashion!
Check out the majority owner of Talbots exerting more control.
The women’s apparel retailer, which has endured hardships in recent months including falling sales, job cuts, an executive departure and a credit problem, said on Thursday that Tsutomu Kajita would become chairman of its board.
Kajita is senior vice president of international operations for Japan’s Aeon Co, Talbots’ majority owner.
Second-quarter profit at cosmetics firm Avon Products Inc more than doubled, as demand in Latin America and other overseas markets more than made up for sagging U. S. results.
What would Mattel wish for if it had one wish to make? The launch of the toy giant’s “My Meebas” points to one possibility — better fortunes for its girl’s toy business, as Barbie sales continue to face trouble.
Mattel launched “My Meebas” — a toy for girls aged 6 to 12 that houses a plush “Meeba” in a plastic tube, which serves as a gaming device with a movable LCD screen.
As part of the Chapter 11 bankruptcy petition filed in May, home goods retailer Linens ‘n Things said it would close underperforming stores.
The chain — which sells home goods ranging from furniture and window treatments to kitchen gadgets and bedding – said on Monday it only plans to close 57 underperforming stores, instead of 87 as it had previously disclosed.
Check out the back-to-school blues.
Nope, it’s not just kids who are likely to find going back to school depressing. Retailers are also likely to find the back-to-school season tough to take.
In a new survey by Deloitte, 71 percent of of respondents said they plan to spend less on back-to-school items this year. In fact, almost half plan to reduce their household spending by more than $100.
Stop us if you’ve heard this one before: Higher gas and food prices continue to pressure consumers, Deloitte’s U.S. Retail leader Stacy Janiak said in a news release.
“Retailers should focus on areas that will contribute to profitable growth, such as adapting their merchandising and promotional activities to increase loyalty among existing customers and attract new customers,” she said.
Among survey findings: 79 percent will buy more back-to-school items on sale, 68 percent will buy more lower-priced items and 46 percent will shop at different — or less expensive — stores than usual.
Also in the basket:
Hasbro profit tops view, costs remain challenging
Crisis at Mervyns: Credit concerns mount over economic woes (WWD)