NEW YORK — Stores deepened discounts more than planned in June to draw recession-scarred shoppers to buy summer tops and other merchandise, but shoppers mainly bought items they needed, resulting in small revenue gains.
The mixed results from June, released Thursday, are raising concerns about the back-to-school season and consumers' ability and willingness to hit the accelerator on spending.
The International Council of Shopping Centers' index of June retail sales rose 3 percent, the low end of its growth forecast that ranged from 3 to 4 percent. But that's compared with a 5.1 percent decline in June 2009.
The figures are based on revenue at stores open at least a year and are a key indicator of retailers' health.
The third straight month of modest sales gains after a surprisingly solid start to the year underscores the choppiness of the economic recovery and puts more pressure on retailers to come up with innovative tactics to get shoppers to spend in the critical months ahead, instead of just resorting to price slashing.
"I think the competition is going to be intense," said Sherif Mityas, a partner in the retail practice at management consultant A.T. Kearney. "The economy is recovering in fits and starts."
Back-to-school merchandise starts flowing into stores next week; it accounts for almost 40 percent of total retail revenue from July through September, estimates Michael P. Niemira, ICSC's chief economist.
Merchants' come-ons are great news for deal seekers — if they have the means to spend.
June's results, which cover the period from May 30 through Saturday, were inflated by a late Memorial Day weekend, which lifted results by 1 percentage point last month and deflated May by the same amount, Niemira said.
Uncertainty is growing as evidence mounts — from disappointing housing data to sluggish hiring — that the recovery is stalling heading into the second half of 2010.
"If we don't get employment growth, it will continue to be choppy, and worry will grow," Niemira said.
Analysts say it was hard to discern clear trends in June's figures. Department stores like Macy's and J.C. Penney Co. fared much better in June than mall clothing chains, a sign that the department stores' push for exclusive merchandise is paying off.
Meanwhile, discounters such as Target will be battling it out with Wal-Mart, the world's largest retailer, which has stepped up discounts. But dollar stores are also upping the ante: Family Dollar has launched its own children's clothing collection called Kidgets that features three-piece toddler boys' and girls' sets for $8.