JUNE RETAIL SALES LOOK GOOD FOR DEPARTMENT STORES

Department stores and general merchandise stores helped June have a strong increase in retail sales. Department stores rose .7% to $13.2 billion and general merchandise stores rose .4% to $56.1 billion. Overall, retail sales rose .6% in June, to $457 billion, above economists’ expectations for the month.

“June’s retail sales grew at a solid pace on the heels of a strong showing for both May and April,” said Jack Kleinhenz, chief economist at the National Retail Federation. “Consumer spending has rebounded strongly in the second quarter after two weak previous quarters. Additional job gains and rising wages are supporting the strength in retail sales and should provide momentum going into the second half of 2016.”

Apparel and accessories stores had a slight decline of a 1% drop in sales to $21.1 billion. Those clothing stores did have a strong May.

Economists are optimistic for a continued strong second half of the year, and expect back to school sales growth slightly higher than was seen last year.

Source: WWD.COM

CONGRATULATIONS 2016 GRADUATES! GRAD GIFT SPEND HIGHEST IN 10 YEARS!

The National Retail Federation (NRF) reports that 2016 graduation spending will reach a 10-year high this year, with spending expected to reach $5.4 billion. Americans celebrating high school and college graduations give special gifts, and retailers are offering a lot of options for the best gifts possible. Retailers will need to keep graduation gift items up front and in stock, and advertise locally for shoppers who look online before going shopping.

NRF’s 2016 Graduation Spending Survey revealed the average person buying graduation gifts will spend $106.45, up 3.9% from last year. Each individual graduate should not get too excited, though – the average shopper is buying for 2 graduates this year, so the spend is higher but spread out among more recipients.

Not helping retailers is the fact that cash is the most popular gift, given by 56%. Greeting cards, with the cash inside, will make up 39% of spend. This is followed by gift cards at 31%, clothing at 14% and electronics at 11%.

While the amount of spend averages $106.45, the age group of the gift giver makes a difference. Spending by those aged 45-54 will average $120.74, compared with $78.08 from those 18-24.

Source: NRF.com 

RETAIL STOCK MARKET WAS A BEAR YESTERDAY, DROPPING TO WORST LEVELS SINCE 2011

There were stock declines all over the retail spectrum yesterday, as consumers spend less than expected and shift spending from traditional department stores and retailers to nontraditional online retailers. The SPDR S&P Retail ETF closed down 4.44%, the worst since August 18, 2011 and down 15% over the last 12 months.

Macy’s is getting the most news of the day, closing down 15.2%. This caused CEO Terry Lundgren to lower its full-year forecast. Quarterly earnings for Macy’s exceeded expectations, but revenue came in below estimates.

April retail sales will be announced on Friday morning, and analysts are waiting to see what stock impact these results will have.

Other retailers with dropped stock levels yesterday include Wal-Mart, Home Depot, Nike, Fossil, and Disney, who dropped 4.04%, its worst day since January 15.

Source: CNBC, Wall St Journal

RETAIL SALES FALL UNEXPECTEDLY IN MARCH

Although economists projected a 0.1% gain in retail spending in March, sales fell 0.3%. Of the 13 retail segments tracked, 9 of the 13 saw spending growth, but 3 categories dropped significantly enough to create the loss: autos, clothing and dining out. Sales decreased 0.9% at clothing chains, the biggest loss since October.

The labor market is robust, so the trend of less spending comes as a surprise. The value of sales is also being hurt by low prices, as retailers are offering discounts to clear unwanted merchandise in their warehouses. Sales at online retailers dropped 0.1%.

Of the 9 categories that saw increased spending, sporting goods and hobby stores rose 0.2% and electronics and appliance outlets rose 0.1%. Building materials and garden equipment stores increased the most, up 1.4%.

Source: Bloomberg, CNBC

Warm Weather Expected to Boost Consumer Spending and Apparel Sales

Despite an expected snow storm in the mid-Atlantic States and New England, consumer spending and apparel sales should both rise as the weather improves, according to analytics firm Planalytics. In its weekly report, Planalytics said that warmer weather is resulting in “many consumers thinking and purchasing spring. The warming conditions during the Easter run-up period will help drive demand for seasonal apparel as well as live goods.” Looking ahead, the analytics firm said, “western locations can expect strong gains for both spring apparel and consumables.”

Last week, the warmer weather already had an impact on retail sales – but not in all regions. Chief economist of the Retail Economist LLC,  Michael Niemira said spring-like “weather continued to drive interest in spring clothing in the east over the past week, but cool and wet weather in the west curtained demand.” Easter sales are getting a slight boost due to the holiday falling early in the season this year.

Looking ahead, Planalytics said that businesses throughout North America can expect above normal temperatures in most markets over Easter weekend. “Sandals, short sleeve shirts, cold beverages and sun care will be in demand as temperatures rise above normal,” researchers said

Source: planalytics.com

A Decline in Consumer Spending Is Forecasted for March

According to data from Chain Store Guide’s Consumer Spending Report, the month of March is likely to see a slowdown in consumer spending. While current economic reports are varied, the unpredictable stock market and upcoming elections have likely created unease among consumers.

When polled on the state of the U.S. economy, nearly 30% of those asked would rate the economy as “Poor” compared to only about 25% the previous month.  The data did, however, reveal some positive trends as well.  Notably, 80% of consumers polled reported personal finances as either “excellent”, “good” or “fair”. And, all three of CSG’s indexes – US Spending Monitor, Restaurant Spending Monitor and Retail Spending Index – are close to their 12-month averages.

Source: Chain Store Guide

Source: Chain Store Guide

Cool Start to Retail Spending Predicted in January

With many Americans suffering from a holiday-spending hangover, it’s not surprising when we see a lull in spending in January. Coupled with abnormal weather conditions across the country and an uncertain economy, consumer spending is likely off to a slow start this month.

The Chain Store Guide (CSG) Retail Spending Index saw its largest decrease since July of 2015 when it dropped 1.4 points to 101.3 in December. This decline led CHG to forecast low spending in January and an overall slow start to 2016.

The long-term outlook for 2016 is more positive, according Kiplinger’s. They predict that retail sales will expand by a healthy 4.4% in 2016, up from 2015’s 3.2% growth.

Current US spending increased slightly in october but still sits well below 12 month average; retail sepnding in october the lowest since august 2014

The Consumer Spending Report (CSR) released in November indicates that consumer spending in October increased slightly by .9 points to close to 103 points, but still sits below the current twelve month average of 105.6. The overwhelming majority of consumers rated the economy as fair or poor, continuing this trend from September.

Retail spending decreased in October to 99.4 points. This continues a five month steady decline. Consumers indicated adults are spending less in every retail category: 40.5% spending less on household expenses, 39% spending less on home improvements and 32.8% spending less on clothing/footwear/accessories.

With Black Friday and Cyber Monday coming, 60% of consumers will shop in a retail store, while also using mobile devices and personal computers as part of their sales research and shipping products. In November, consumers indicated they will spend about the same or less than in October, regardless of the upcoming holiday shopping.

Source: Consumer Spending Report

Fright Night: Halloween Will be particularly scary for retailers this year but chocolate sales stay high

Halloween retail sales, which had grown to an $8 billion industry by 2012, is expected to fall 7 percent this year, to $6.9 billion. According to the National Retail Federation, this is the lowest total since 2011.

Experts blame the weak Halloween forecast on a shift in consumer spending to experiences rather than must-have items. Some retail experts view Halloween as a prediction of holiday sales, so poor results could cast a spell on the Christmas selling season. Supply and demand are not syncing, creating high inventory levels and low sell thru percentages of Halloween products.

The average American will spend $74.34 on the holiday, forecasts the NRF. This is slightly down from $77 in 2014. Although Halloween product sales may be down, malls are trying to take advantage of the holiday, as it falls on a Saturday this year, with trick-or-treat events and more Halloween-themed items on the shelves and on display. Melinda Merrill, a Fred Meyer spokesman, said that when Halloween falls on a weekday, year-over-year sales growth is typically in the single digits. “When it falls on a weekend, there are more parties, they are bigger and customers decorate and dress up for them on a bigger scale. … We’ll see much larger growth,” Merrill added.

Halloween chocolate sales generated $217 million in 2014, and remains the top-selling treat for the holiday. Leaders Hershey and Mars account for 87% of chocolate Halloween candy. Most variety bags contain chocolate over fruity or sour flavors.

Sources: New York Post, USA Today Democrat Herald, MarketRearch.com

September Consumer Spending Index Improves While Retail Spending Index Decreases Slightly for the Month

The Consumer Spending Report US Spending Index increased 1.7 points in September. 28.7% of adults surveyed rated the US economy as excellent and 30.3% said it is getting better. There was a divide between Democrats and Republicans: 56% of Republicans felt the economy is getting worse, while Democrats had a much higher percentage believing the economy is excellent or getting better. While in most months adults aged 40-64 rate the economy and personal finances low, this month this age group had the highest percentage of respondents believing their finances are excellent.

The Retail Spending Index decreased 0.9 points. The percentage of adults that expected to spend on household expenses declined, with only 10% saying they expect to spend more. 51.2% responded they spent the same as the previous month. The outlook for next month appears to also remain flat.

Source: Chain Store Guide

US CONSUMER SPENDING IN SECOND QUARTER INCREASES AND MAY HELP THIRD QUARTER

US economic growth in second quarter 2015 saw a 2.3% increase in gross domestic product over first quarter. This gain was boosted by 2.9% growth in consumer spending.  Also, consumer personal savings rate went down to 4/8% from 5.2%, showing that consumers are starting to open their wallets and start spending again. 

Business investment for the period contracted and inventories remained flat. However, consumers and transportation companies are benefitting from lower oil prices. A growth in consumer spending in the third quarter will get more product flowing through supply chains.

Source: Wall Street Journal

US $527 Billion Personal Accessories Industry See Decline in Consumer Spending, But Expect Growth By 2020

Personal accessories are set to decrease by 1% in 2015 to $527 billion. Fashion trends are driving stronger growth for jewelry, but other personal accessories categories are seeing a slow growth rate in 2015. Factors in this slow growth are a decline in consumer spending, heavy reliance on European markets and unfavorable US dollar exchange rates.

International companies are hoping to cast a wider net in their channel strategies and reach more consumers with their omni-channel presence. Currently the Asia-Pacific market is 53% of the world’s personal accessories market.

By 2020, the global personal accessories industry is forecast to reach $645 billion, which would be a 4.1% annual growth rate.

Source: Business Wire

JUNE CONSUMER SPENDING REPORT SHOWS OVERALL DECREASE BUT HOME IMPROVEMENT SPENDING IS STRONG

The US Consumer Spending Index increased 0.4 points in June. The percentage of consumers who rate the economy as excellent or good has continued to increase each month, at 30.9%, though is much lower than the 68% who felt the economy is fair or poor. When asked if personal finances were getting better or worse, 30.7% answered better, 33.1% answered worse and 35.2% answered the same.

The Retail Spending Index decreased 0.5 points in June. Expected spending for July slightly decreased in every category except discretionary personal entertainment expenses, which increased to 14.9% in June versus 13.7% in May. The category with the largest percentage of expected spending was household improvements at 22.9%. Expectations are that spending next month will remain about the same as 51.3% expect to spend the same. However, 28.2% say they will spend more in July, the majority being adults with children.

Source: Chain Store Guide

LUXURY GOODS SALES ARE UP, BUT DESIGNER FLASH IS DOWN

Within the designer luxury brands market, some brands have seen increased sales while others showed decreases. While the overall market for luxury goods has grown steadily since the end of the recession, the trend for wealthy shoppers is to purchase their products in a subtle way, steering away from flashy logos.  Gucci sales were down 1.1% in 2014, Prada saw sales decrease 1.5%. Louis Vuitton/LVMH also saw sales slow in their fashion and leather goods division.

The current trend for luxury goods shoppers is to continue to purchase these goods, but show sophistication by not flaunting their wealth. Social media is also affecting the luxury brands market, as new items are becoming exposed quickly, desensitizing luxury goods shoppers to things that used to feel special to own. Smaller luxury brands like Yves Saint Laurent and Miu Miu saw 2014 gains of 27% and 4%, respectively. A professor at New York University, who teaches luxury marketing, stated, “These are brands that really control the supply, and therefore they manipulate the market and the desire for their products.”

Experts also say that high-end consumers are increasingly diverting their dollars to experiences, such as lavish vacations or extravagant dinners. To adjust to this, Louis Vuitton added a rooftop champagne bar to their Rodeo Drive store. Gucci and Prada have similar locations in Los Angeles and Las Vegas.

Source: Washington Post

RETAIL SALES DROP IN MAY

May 2015 showed a drop in retail sales by 7.6% versus May 2014. Driving the sales decline was a 9.8% decrease in store traffic and an 8.3% decrease in number of transactions.

Some metrics did show year-over-year improvement. Average transaction value rose 0.8% and sales per shopper increased 2.5%.

The highest day of selling in May was May 9, the Saturday before Mother’s Day. This day is consistently highest in sales, traffic and transaction figures. The lowest traffic and sales were at the end of the month, after the Memorial Day weekend, which was earlier on the calendar this year.

Source: Chain Store Age

US CONSUMER SPENDING INDEX DECREASES IN JUNE

The US Consumer Spending Index decreased by .4 points in June. Confidence in the economy was mixed, as 10.6% of males reported the economy as excellent, versus only 2.9% of females reporting the same. 33.5% of respondents viewed the economy as excellent or good, but 65.2% reporting it fair or poor. When asked about personal finances, 46.8% of those identified as white rated it excellent or good. Those identified as black felt their personal finances were getting better at 37.5% versus 30.2% in May. Republicans in June increased in number who believe the economy is getting better, up 22.7% versus 18.9% in May.

Source: Chain Store Guide           

MAY CONSUMER SENTIMENT INDEX FALLS TO 88.6

Data released Friday indicates consumers are more skeptical about the economy. May sentiment unexpectedly fell to 88.6, down from 95.9 in April and an 11-year high in January of 98.1.  Economists surveyed by the Wall Street Journal projected the May index would stand at 95.5.

"Confidence fell in early May as consumers became increasingly convinced that there would be no quick and robust rebound following the dismal (first) quarter" even if the underperformance was exaggerated by inadequate seasonal adjustments, said Richard Curtin, chief economist at Michigan's Survey of Consumers that compiles the sentiment index.

So far this year, consumers have not rushed to increase spending. Retail sales were flat in April. The one-year inflation expectations are now 2.9%, up from 2.6% in April. Consumers have chosen to save money or pay down debt.

Source: Fox Business.com

Household Consumer Spending Rebounds in March

The latest Survey of Consumer Expectations from the New York Fed stated that as of March consumers expect their spending will increase by 4.5% over the next year. This is a big change from February findings, when consumers thought spending would be just 3.8%. The February decline is attributed to the poor weather conditions.

Retail sales are expected to show a 1% increase in March, after declines in January and February.

Source: Business Insider

BELK INC EXPLORING POSSIBLE SALE OR MERGER

Belk Inc., founded in 1888 by William Henry Belk and in the third generation of Belk family leadership, has hired Goldman Sachs to help it evaluate strategic alternatives, including a potential sale. Belk is the largest family owned department store chain in the US, valued at as much as $4 billion.

In fiscal year 2014, ending January 31, 2015, Belk posted net sales of $4.1 billion, up 1.8% compared to the previous year. After Reuters reported on the potential sale, Belk issued a statement that it had hired Goldman Sachs to help them explore all options and expect to conclude its analysis in the next several months.

US consumer spending has been slow moving this year despite lower gas prices, due to weather conditions and consumers’ desire to save. This has affected department store sales, prompting chains to resort to smaller store models and aggressive discounting.

The last major acquisition in the department store sector was Canadian chain Hudson’s Bay Co, owner of the Lord & Taylor chain, which acquired Saks in 2013 for $2.9 billion. Major department stores like Macy’s and Nordstrom are expected to be contacted by Belk to solicit their interest in a deal. Neither Goldman Sachs, Macy’s nor Nordstrom responded to requests for comment.

Belk operates 297 stores in the southern US and is based in Charlotte, North Carolina.

Source: Reuters.com