December 12, 2013

U.S. shoppers tighten fists, sobering retailers

Consumers are used to bargains, have learned they can live with less, and are burned out on the frenzy of the season.

By Anne D’innocenzio And Candice Choi
The Associated Press

(Continued from page 1)

click image to enlarge

Shoppers rest on chairs in the Fashion Show mall in Las Vegas. Data so far this season suggests shifts in the attitudes of U.S. shoppers that could force stores to reshape their strategies.

The Associated Press

SCRUTINIZING PURCHASES

The recession not only taught Americans to expect bargains. It also showed them that they could make do with less. And in the economic recovery, many have maintained that frugality.

So whereas in a better economy, Americans would make both big and small purchases, in this economy they’re being more thoughtful and making choices about what to buy.

Analysts say that hasn’t boded well for retailers that sell clothing, shoes and holiday items. That’s because Americans are buying more big-ticket items over the holidays.

Government figures show that retail sales were up 0.7 percent in November, the biggest gain in five months. But the increase was led by autos, appliances and electronics.

Auto sales jumped 1.8 percent, furniture purchases rose 1.2 percent and sales at electronics and appliances stores rose 1.1 percent. Meanwhile, sales at department stores and clothing chains were weak.

Americans are leaning toward big purchases for two reasons. They want to take advantage of low interest rates. And since many paid down debt since the recession, they feel more comfortable using credit cards again for such purchases.

But they won’t do that and buy smaller items. “This is still a weak, fragile shopper,” says Craig Johnson, president of Customer Growth Partners, a retail consultancy.

Retailers including Macy’s and Target in recent months have said that shoppers’ focus on big-ticket items has put a damper on sales of discretionary items, and the retail federation says it has hurt holiday sales in particular.

HOLIDAY CONSUMERISM

Black Friday used to be the official kickoff to the buying season, but more than a dozen chains opened on Thanksgiving this year.

That didn’t sit well with some shoppers who viewed it as an encroachment on family time. Some threatened to boycott stores that opened on the holiday, while others decided to forgo shopping altogether.

In a poll of 6,200 shoppers conducted for the retail federation prior to the start of the season, 38 percent didn’t plan to shop during the Thanksgiving weekend, up from 34.8 percent the year before.

Ruth Kleinman, 30, isn’t planning to shop the entire season in part because she’s disheartened by the holiday openings. The New Yorker says the holiday season “has really disintegrated.”

While some shoppers didn’t approve, analysts say stores will need to open on the holiday to appeal to the masses. Overall sales declined over the holiday weekend, but several retailers said there were big crowds on Thanksgiving. “Customers clearly showed that they wanted to be out shopping,” says Amy von Walter, a Best Buy spokeswoman.

Analysts say stores will need to redefine Thanksgiving as a family tradition beyond sitting at the table eating turkey to make more shoppers comfortable.

“They have to show that they’re maintaining a family tradition in new ways,” says Marshal Cohen, chief retail analyst at market research firm NPD Group.

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