May Sees More Saving Than Spending

Consumers Spend LessRetailers were beginning to release a sigh of relief after April’s sales report. Increased hiring and a late Easter holiday raised same-store sales 8.7 percent compared to April 2010. May’s results, however, may have some retailers holding their breath once again. As the Wall Street Journal reports, “The 25 retailers tracked by Thomson Reuters posted 4.9 percent growth in May same-store sales, missing expectations for a 5.4 percent gain.” Although any growth in sales is good after the recent economic downturn, this was the first miss since December in which retailers did not hit their projected goal. To Janet Hoffman, managing director of the retail practice at Accenture, this indicates, “The cards are stacked against the consumer right now and retailers will have to work hard to bring them into stores.”

The Cards Stacked Against Consumers

As reported in the June 2011 issue of Independent Retailer Magazine, luxury spending is up, unharmed by the economic crisis and thriving. But for those of you selling in the middle and lower markets, your sales are continually being affected by the price of gas, as well as higher cotton and labor prices. Yet, that wasn’t all that consumers and retailers had to face during the month of May. Chief Executive, Ed Krell of Maternity Corp., pointed to “severe storms and flooding that ripped through parts of the country during the month,” keeping consumers off the streets and away from store fronts.

It was recently reported that American and Canadian neighbors are displaying different shopping habits. According to new global research from Boston Consulting Group, to be released in June, Canadians are feeling frugal, while Americans are spending with confidence, but after May’s results, retailers aren’t sure of this confidence level driving American consumers to open their wallets and spend their money. In fact, the concern is that confidence and spending will continue to decrease, as “Retailers were already looking at an uncertain second half of the year because of price increases they will put in place to offset higher cotton and labor costs.”

To learn more about specific sales results for the month of May, click HERE.