November 5, 2009, 12:00 AM

The consumer spending deep freeze begins to thaw

Same-store sales for 30 retailers increased 2.3% in October, Retail Forward reports, marking the second consecutive month in which retailers increased same-store sales over a year earlier.

 

A bit of light glimmers through the October same-store sales that retailers are reporting this week, according to analysis by consultants Retail Forward of sales at 30 retailers. And that little glimmer also shows up in Retail Forward’s monthly consumer survey.

Same-store sales for the 30 retailers increased 2.3% in October, Retail Forward reports. October is the second consecutive month in which retailers increased same-store sales over a year earlier. In September, same-store sales grew 0.9%. In October a year ago, same-store sales were down 3.8% year over year.

“October again showed positive signs from shoppers, although the improvement was less even among retailers compared with the back-to-school months. Households remain focused on shopping for needs and this kind of cautious shopping behavior will restrain the sales improvement we can expect in the coming months," says Frank Badillo, senior economist at Retail Forward.

Other positive signs, according to Retail Forward’s October ShopperScape monthly survey of 4,000 U.S. primary household shoppers:

  • The percentage of shoppers planning to decrease their near-term spending declined to 45% from 53% a year ago and 47% in September.
  • The percentage planning to spend about the same as a year ago increased to 47% from 39% a year ago and 44% in September.

Increased spending is not yet materializing, however: only 9% of shoppers plan to increase their near-term spending compared with 8% a year ago.

 

Caution continues to rule, according to the ShopperScape survey:

  • The percentages of shoppers using deal-seeking tactics-such as taking advantage of good sales/deals, doing more price comparison shopping and using more coupons-held steady or edged higher in October compared with May. But the percentages remain lower than August 2008.
  • The percentages of shoppers using tactics to limit their spending-such as buying only things they need, buying fewer things or shopping less often-held mostly steady or edged higher in October compared with May. One exception is that the percentage of shoppers who said they are buying fewer luxury items declined to 24% from 29% in May. All the October percentages remain lower than August 2008.
  • The percentages of shoppers trading down among brands and channels-such as buying less expensive versions of products, buying more store brands, or doing more shopping at discount retailers-held steady or edged higher in October compared with May. But the percentages remain lower than August 2008.

For holiday shopping, shoppers are wary about spending more than last year, but more shoppers are planning to spend the same as last year and fewer are planning to cut back:

  • 7% plan to spend more this year on holiday gifts-the same percentage as last October.
  • 43% plan to spend about the same amount as last year, which is significantly more than the 37% planning to spend the same amount in October 2008.
  • 45% will cut back holiday spending, significantly less than the 50% planning cutbacks in October 2008.

Those intentions, however, are fluid as 42% don’t know how much they will spend on gifts this year and 20% don’t know how much of their budget they’ve spent so far.

 

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