Filed under: Forecasts, Products and services, Consumer experience, Wal-Mart (WMT), Costco Wholesale (COST), Economic data, Nordstrom, Inc (JWN)
Some of the country’s largest retail chains had good June sales, benefitting from consumers looking for a place to spend their tax rebates, but this was not the case for higher-priced department stores. Retailers offering big discounts were among the privileges ones as consumers chose to stay away from high prices.
Consumers spent on the basics, looking for bargains, boosting sales at some companies like Wal-Mart (NYSE: WMT), but resulting in losses for the others like Nordstrom (NYSE: JWN) and American Eagle (NYSE: AEO). This confirmed that retailers will face further weak demand even during the back-to-school shopping season, and more deep discounts will be needed.
As June is considered a key month for sales, merchants were hoping for a “stimulus” effect from tax rebates, despite worries tied to soaring gasoline and food costs. However, only companies offering cheaper gas like Wal-Mart, Costco (NASDAQ: COST) and BJ’s Wholesale Club (NYSE: BJ) saw their dreams accomplished. Thus, Wal-Mart came with June sales growth of 4.3%, Costco reported a 9% increase in June same-store sales, while BJ’s Wholesale saw a growth of 16.5%.
Making some comments on this unpleasant situation, retail consultant Kurt Barnard believes department stores are the only ones responsible for these negative results.
“They treat the consumer to the same things they’ve treated them to in past months and years. That’s particularly unfortunate because in a down economy, consumers must be given an incentive to break through the barrier that dictates ‘Don’t spend” Barnard said in an article in today’s Chicago Tribune.
For now it looks like any hope of a swift rebound in consumer spending is not going to happen. With the market dealing with factors such as the slumping economy and anxious consumers, it just does not seem likely that we are going to see a market wide pick up in retail sales over the rest of this year, especially in the higher-end retail stores.
Consumers are definitely expressing their concerns on the overall economy through their shopping habits. Discount and bargain retailers should continue to see their sales stay moderately level, but the more specialty high-end retailers are definitely going to have their work cut out for them.
How have your shopping habits been modified over the past year? Do you continue to do your shopping in the same locations, or have you, like many others, started looking more for the bargains out there when you head to the stores?
Eliza Popescu is a financial writer for the on the web investment advisory service Investor’s Observer.
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