September 18, 2008
The normally booming back-to-school shopping season is turning into a
nightmare for most American retailers this year, with evidence
suggesting banking worries and Wall Street concerns are spilling over
onto Main Street.
Consumers interviewed by America's Research Group reported a dramatic shift in their shopping habits for the coming school year. Of the 26 retail categories studied in ARG's Consumer Mind Reader survey, only three saw increased store traffic over last year's levels. Only four categories experienced larger average sales than a year ago.
Discount apparel retailers, home accessories stores, and outlet malls/factory stores saw both increases in both sales and store traffic. Home accessories stores experienced increased sales volume but not store traffic.
Taking the biggest hits in sales were retailers of hardware, appliances, electronics, computers, auto parts, musical instruments and jewelry. Consumers also reported far fewer purchases from catalogs and over the Internet.
Jewelry stores suffered most in the bleak economy, with significant declines in both traffic and sales. Clearly belt-tightening consumers are sacrificing luxury purchases first as they struggle to pay their bills.
The back-to-school season is usually one of the best retail events of the year, a make or break time for most stores heading into the Christmas shopping season.
A dismal retail summer and disastrous back-to-school results will force many stores to offer better discounts. Otherwise their shelves will be full of left over merchandise from the spring and summer.
With Hurricane Ike forcing gas prices up, consumers are in no mood to spend more on products. When coupled with economic hardship, unpredictable gas prices and an uncertain future, the consumer is changing shopping patterns just to survive.
"I have talked with millions of consumers over three decades about their retail shopping habits, and I have never seen this much of a change in buying patterns from the American public," said ARG founder and chairman Britt Beemer.
Clearly consumers are still changing and as they try to cope with higher prices everywhere they turn. The retailers who survive will be the ones who understand and cater to their customers to meet their needs.
