Tags: retail | sales | recovery | spend

Consumers Still Resisting Some Impulse Urges to Spend

Tuesday, 13 Apr 2010 02:13 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
Steadily increasing U.S. retail sales might not amount to a consumer rebound, but they may be as good a recovery as the country can expect.

After months of tightening budgets and doing without nice-to-have purchases, consumers have started to spend more than they save.

Analysts expect spending to continue at an improved clip through 2010 but do not see it attaining the heights reached before the recession kicked off in 2007.

"Historically, the most important determinant to the pace of a recovery is just how deep and long the preceding recession was," said Hank Smith, chief investment officer of Haverford Investments. "If that's going to hold true this time around we should be in for a pretty big recovery, and a lot of that has to do with pent up demand."

March's strong rise "is a good sign that the consumer isn't totally dead," Smith said.

But some question whether the heady years of record housing prices and easy credit should serve as a benchmark any longer.

"Certainly the consumer is feeling better today than they were a year ago," said Patricia Edwards, founder of wealth management firm Storehouse Partners. "That being said, to just assume that this means the consumer is back and retail is going to return to its former glory is frankly inane."

Sales at stores open at least a year, or same-store sales, rose 9.1 percent in March, helped by an early Easter, better weather and easy comparisons with a tough month in 2009. It was the best month on record as tracked by Thomson Reuters and the seventh straight monthly increase.

"The macro environment was a strong tail wind to retailers and they delivered," said Lawrence Creatura, a portfolio manager at Federated Clover Investment Advisors in Rochester, New York.

Still, chances of a steeper rebound appear out of reach.

Candace Corlett, president of WSL Strategic Retail, has been telling her retail clients for the past two years that shoppers will not come back to the "I see it, I want it, I buy it" mindset that prevailed in the glory days of 2005 and 2006.

Sixty-three percent of women said they do not want to go back to pre-recession buying habits, Corlett said. She expects a lasting change from the recession will be consumers thinking that if they already have something similar in their closet, they probably do not need to buy more.

"We didn't think that way five years ago. We just built a bigger closet," Corlett said.

The economy has been in a recovery for some time now and spending, which fell less than income during the recession, could recover by the end of this year or early 2011, said Mark Vitner, senior economist at Wells Fargo. He said income will probably not recover for another two to three years.

Where analysts might once have predicted a major bounce back, many now see a gradual rise still that is very dependent on unemployment trends.

Michael Niemira, chief economist and director of research for the International Council of Shopping Centers, said the economy is still at the beginning of a cycle where consumers are acting on pent-up demand that built up in the recession.

"To that extent I remain optimistic this year that the retail recovery is certainly unfolding," Niemira said.

Jharonne Martis, director of consumer research for Thomson Reuters, considers teen retailers a good proxy of discretionary spending. Teen apparel same-store sales rose 9.6 percent last month, 2.2 percentage points more than analysts had expected.

"The fact that it came in so strong suggests that finally consumers are tapping into discretionary income and spending it," Martis said. "We're finally seeing the consumer shop ... after not shopping for two years."

Industry watchers said they were pleased to see pockets of strength in other discretionary areas as well.

Doug Conn, credit analyst and managing director at Hexagon Securities, pointed to Nordstrom Inc. citing dresses as a top performer in March.

"That category has not been strong for a very long time at any retailer and that would seem to imply that, on the margin at least, women are going out and buying maybe some of the nonessentials now," Conn said. "There seems to be some small signs there that some of the higher-end categories are starting to show a little bit of life."

© 2014 Thomson/Reuters. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

Genetic Mapping Triggers New Hope on Schizophrenia

Tuesday, 22 Jul 2014 07:28 AM

 . . .

Apple Asks Suppliers to Produce up to 80 Million Large-Screen IPhones

Monday, 21 Jul 2014 21:21 PM

Apple has asked suppliers to manufacture between 70 million and 80 million of its two upcoming large-screen iPhones by t . . .

Lake Ontario 'Shark' a Hoax to Promote Discovery Program

Thursday, 17 Jul 2014 12:58 PM

Lake Ontario's mysterious "shark" turned out to all be a hoax concocted by a film crew to create publicity around Discov . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved