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Wary shoppers look everywhere for discounts

With the economy limping along, Americans are once again being choosy at stores, many of them buying only at deep discounts because they can't shake uncertainty about their jobs.

Retailers around the country posted a sales increase of just 2.8 percent for July over a year earlier — and at that time, the economy looked much bleaker than it does today.

The July figure, released Thursday by the International Council of Shopping Centers based on results from 31 chains, was the fourth straight month of weak retail numbers. For the most part, economists were disappointed.

"To break out of this, we need both employment and consumption to come up together," said Nigel Gault, an economist at IHS Global Insight.

Today, the government will release its snapshot of the nation's job market for July, and no one expects anything strong. Private companies are expected to have added 90,000 jobs for the month, not nearly enough for healthy economic growth. Unemployment is not expected to budge much from its current 9.5 percent, and may rise.

"With limited hiring by the private sector, it is becoming increasingly difficult for the recovery to be sustained," said Andrew Gledhill, an economist at Moody's Economy.com.

Pierre Ellis, an economist at Decision Economics, wrote in a note to clients that an "unyielding flow of layoffs" suggests employers are still not comfortable with the size of their staffs.

And with the job market still looking shaky, Americans are in no mood to spend freely.

Abercrombie & Fitch and American Eagle Outfitters, clothing stores that cater to teenagers, are already offering generous discounts on jeans for back-to-school shoppers.

Stores for teens were among the worst performers in July. Winners for the month included Costco Wholesale, which offers big bulk discounts, and department store Macy's. Even there, though, shoppers are picky.

"I'm buying things that I need now," said Mia Crawford, a freelance language interpreter who was browsing at Macy's Manhattan flagship store Thursday. "I don't see the economy getting better. I feel worse off."

At Kohl's, more shoppers bought things in July, but the total price of what they bought and the number of items they bought fell slightly, "indicating that our customer remains cautious in her spending," chief executive Kevin Mansell said.

The recession taught shoppers to buy items closer to when they needed to use them — known in the clothing industry as "buy now, wear now." That is particularly true of poorer and middle-income shoppers.

To make up for it, stores are "going to have to be very promotional all the way through," said Ken Perkins, president of research firm RetailMetrics.

>> Fast Facts

July sales

Here is a snapshot of some major retail chains' July sales performance compared with July 2009:

Discounters

BJ's Wholesale Club: +2.8 percent

Costco: +6 percent

Target: +2 percent

Clothing stores

Abercrombie & Fitch: +7 percent

Aeropostale: +1 percent

Gap: +1 percent

Limited Brands: +12 percent

Stein Mart: -2.6 percent

TJX: +2 percent

Drugstores

Rite Aid: -1.1 percent

Walgreen's: +0.4 percent

Department stores

Dillard's: -3 percent

J.C. Penney: -0.6 percent

Kohl's: +4.1 percent

Neiman Marcus: +12.3 percent

Nordstrom: +7.6 percent

Macy's: +7.3 percent

Saks: +6.4 percent

Associated Press

Wary shoppers look everywhere for discounts 08/05/10 [Last modified: Thursday, August 5, 2010 10:15pm]
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