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Even deep discounts don't grab retail shoppers

NEW YORK — A dollar for a 40-ounce bottle of ketchup? Yawn. Four bucks for a 12-pack of Coke? No sale.

Even deep discounts on everyday items don't seem to be enough to get Walmart shoppers to bite these days, and other chains are worried Americans won't be in the mood to spend in the months ahead, which are critical for those companies.

On Tuesday, quarterly financial results from retailers including Home Depot and Abercrombie & Fitch showed that profits are rising because retailers are cutting costs and keeping inventories lean.

But with the economy slowing once again and consumer confidence falling, they expect less out of the rest of the year, and they already have to push harder to get shoppers to buy.

At Home Depot, sales are being driven by small repair projects, not big renovations, and weak spending has caused it to cut revenue forecasts for the year. It has added more signs in stores pitching deals like $19 fiberglass six-panel doors.

Wal-Mart Stores' chief financial officer, Tom Schoewe, said its deep price cuts in May and June, including the ketchup and soda, weren't enough to bring people in the door and get them to buy other things.

The cuts targeted 22 foods and other essentials at an average savings of 30 percent. The original price for the big bottle of ketchup was $2.42.

"If low-income shoppers are passing that up, that goes to show you how tapped out they are," said Ken Perkins, president of research firm RetailMetrics.

Middle-income shoppers are not faring much better. And stores can't count on shoppers with jobs because of layoff fears.

Retail sales were improving earlier, helped by a rising stock market. But things have slowed since April, and during this critical back-to-school season, echoes of the recession still sound.

The tough economy has apparently given fashionistas an appetite for bargains, driving some to discounters such as TJ Maxx. Its parent company raised its full-year profit outlook on Tuesday.

But Wal-Mart, with more than $400 billion in revenue, is the biggest corporate barometer of consumer spending and the overall economy.

Schoewe said Tuesday that consumers are no worse off than they were early this year — but no better off, either.

Even deep discounts don't grab retail shoppers 08/17/10 [Last modified: Tuesday, August 17, 2010 9:47pm]
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