Consumer Spending Freeze Starting To Thaw: Report
By Alan Wolf -- TWICE, 8/24/2009
COLUMBUS, OHIO — While consumers are still cautious about spending, indicators point to a slight loosening of their purse strings, according to a report by Retail Forward.
“Shoppers are not yet ready to spend freely, but the results reported by retailers provide some signs that shoppers are easing up on their cutbacks,” said Frank Badillo, senior economist at the market research firm and consultancy.
According to Badillo, retailers said those factors included:
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a year-ago comparison period boosted by economic stimulus payments;
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the shift by some states of a tax holiday period into August;
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lean inventories requiring less clearance;
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fewer promotions;
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a later start to back-to-school shopping and unfavorable weather.
The handful of retailers reporting better results in July may have been helped somewhat by an improvement over time in shoppers' spending plans. According to the results of Retail Forward's July ShopperScape survey, the percentage of shoppers that plan to spend less in the coming month has trended lower in a seesaw manner since peaking at 55 percent in January. That percentage declined to 47 percent in July.
In contrast, the percentage of shoppers who plan to spend the same in the coming month has trended higher in a seesaw manner since hitting bottom at 36 percent in January. That percentage increased to 44 percent in July.
The monthly results appear to be both helped by positive trends in household investments and hurt by negative trends in household income, resulting in a mixed impact from shoppers' perception of their financial health. According to the survey, the percentage of households that perceive they are better off compared with last year with regard to their household investments has trended higher since April. That percentage increased to 12 percent in July.
In contrast, the percentage of households that perceive they are better off compared with last year with regard to their household income has trended lower since April. That percentage declined to 23 percent in July.
What's more, restrained plans for back-to-school spending, which has come to include computers, mean there will be no significant improvement in retail sales in the coming weeks, Retail Forward said. According to the ShopperScape survey, nearly one of every four back-to-school shoppers (24 percent) plans to spend less on back-to-school merchandise this year, an increase from less than one of every five shoppers (19 percent) who planned to spend less a year ago at this time.
Nearly one of every four back-to-school shoppers (24 percent) plans to spend more on back-to-school merchandise this year, the survey showed. That's down from one of every three shoppers (33 percent) who planned to spend more a year ago at this time.
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