Retail Guru » consumer spending

US Shops Go All Out To Draw In Black Friday Shoppers

Retail News From the Guardian — Fri, 26 Nov 2010 17:24:00 +0000

Buoyed by improved economic data and signs of returning consumer confidence, US retailers are in an all-out war to get shoppers in the stores and spending tomorrow ,the most significant shopping day in the calendar for the mighty American consumer.

US retailers are anticipating strong demand tomorrow as the Thanksgiving holiday moves into Black Friday — supposedly the day retailers start to go into the black for the year — with consumer stocks leading a rebound on Wall Street on improving data on jobs, personal income and spending.

US economists are also hoping consumer spending will make up for pervading weakness in business investment and the housing market. But it is not yet clear if consumers, who accounts for 70% of economic activity in the US, are willing to take up the challenge.

“We feel better about the economy and the holiday season than we have in some time,” the National Retail Federation’s Scott Krugman told the Detroit News.

This retail season is expected to be the strongest since 2006, according to the International Council of Shopping Centres, with sales at stores expected to increase 3%. The National Retail Federation estimates holiday sales to reach $447.1bn (£283.7bn), up 2.3% on last year.

But after two years of anaemic sales, retailers are not taking any chances. While 31% of households plan to shop tomorrow, compared with 26% last year, retailers are concerned that shoppers have become inured to Black Friday deals, which sometimes surface as early as mid-summer.

“The word ‘sale‘ is pretty much meaningless today,” said Tod Marks, a Consumer Reports senior editor. “That doesn’t get people to raise their eyebrows. Retailers need to up the ante to get people to take a second look.”

Taking advantage of shoppers‘ desire for deals and willingness to camp out all night to get a discount flat-panel TV, some retailers now open on Thanksgiving itself, a move akin to doing business on Christmas Day.

Analysts say the growing popularity of online shopping has contributed to the acceptance of shopping on a day traditionally reserved for eating. Wal-Mart, the largest US retailer, now opens at midnight. But the so-called “doorbusters” – heavily discounted electronics goods that typically draw consumers prepared to queue up – will not go on sale until 5am because of a stampede for TVs at a Long Island branch two years ago that resulted in a security guard being trampled to death.

Retailers say they need every advantage they can get to get people shopping, whether or not that overturns tradition. Still, some retailers are resisting pressure to open on the holiday. “Somebody else is chasing a dollar? Let them do it,” Kevin Mansell, chief executive of the discount chain Kohl’s, told the Wall Street Journal. “I think our associates, and frankly our customers, deserve time with their families and that’s what Thanksgiving is about.”

Marks & Spencer Chief Says Consumers Will Cope With Public Spending Cuts

Retail News From the Guardian — Thu, 28 Oct 2010 06:53:33 +0000

Marks & Spencer chairman Sir Stuart Rose today predicted that consumer spending would not falter as a result of government spending cuts which were “fair to everybody”. Speaking at a retail conference in Berlin he said: “I think consumer spending is strong enough to cope. We’ve got cuts coming through but they are not all happening on 1 January, they are being spread throughout next year.

The retail veteran, who spoke at this year’s Conservative party conference, said he believed consumers “wanted clarity” and the chancellor of the exchequer had given them “absolute clarity” last week. That insight, he said, would enable Britons to plan for the future, which would in turn breed confidence.

But UK retail sales have fallen for the last two months, fuelling fears that the economic recovery is running out of steam. Rose blamed the dip on uncertainty ahead of the cuts announcement as well as warmer weather. This time last year a cold snap gave retailers a sales fillip as consumers bought jackets and knitwear.

Rose said he was in the “glass half full” camp, adding: “I think Christmas will be OK – then everybody has got to put their front foot forward. I think retail will continue to grow (in 2011). It will be exactly what we have seen this year – the weak will get weaker and the strong will get stronger.”

Others in the sector are less bullish about the outlook with Deloitte strategic advisor Richard Hyman predicting UK retail sales could fall 2% next year as the impact of the austerity programme begins to be felt. “I think this is the calm before the storm, From where I am sitting a 2% decline is very possible for next year.”

According to official data retail sales to date are tracking below 2009 and Hyman argues the businesses will struggle to replace all jobs lost from the public sector. Rose was one of the 35 business chiefs who signed an open letter backing the Coalition’s cuts in public spending.

“I was a cutter, an early cutter,” he said. “I fundamentally believe sooner is better than later. I understand the dangers and the difficulties but I thought George Osborne articulated it and so did David Cameron ‘let’s try and be fair to everybody but let’s do it and get on with it’. I think we will move forward and get to the end of 2011 and say that was tough but we are in a better place.”

Most analysts believe consumer spending will hold up during the key Christmas trading period when retailers make the bulk of their profits but falter in the new year. In addition to weakening demand retailers are juggling rising production costs in China and raw material price increases, such as the recent spike in the cotton price.

Carl McPhail, the chief executive of fashion chain New Look estimated its prices would rise by an average of 4% in 2011 as it contended with inflation in its supply chain. “There is price inflation coming through and we will need to pass some of that on to consumers,” he said.

“After Christmas the VAT rise will kick in so a lot of people will bring forward their spending on big ticket items which could mean quite difficult conditions in the early part of next year.” Rose, however, was confident that UK was not headed back into recession as unlike in previous economic downturns, the world was being helped by the strength of emerging markets.

“I don’t think there will be a double-dip. Ten or 15 years ago, if the world went into recession we all waited for America to start up again. But we are no longer reliant on the US locomotive to pull us out of recession, we’ve got the BRICs and Europe pulling together in the Eurozone.”

Christmas spending up on 2008 thanks to last-minute sprees

Retail News From the Guardian — Fri, 01 Jan 2010 17:06:23 +0000

Christmas spending was up on 2008, but activity was fuelled by the imminent VAT rise. Photograph: David Gannon/AFP/Getty Images

Shoppers rushing for last-minute gifts and flooding to high streets for the start of the sales helped lift consumer spending in the last two weeks of the year to outperform 2008's bleak Christmas.

Consumer spending during the final fortnight of December was 2.4% higher than in the same period of 2008, according to card processing firm Barclaycard Payment Acceptance.

The group, which processes credit and debit card transactions for 88,000 UK retailers, said consumers spent £4.09bn on their cards between 19 and 31 December, up from £3.99bn on 2008. The busiest day was 23 December, when £497m was spent on last-minute Christmas shopping.

Following reports of long queues in the small hours of Boxing Day outside shopping centres, the card processor said post-Christmas spending was also up on 2008. As shoppers rushed to the sales, spending totalled £1.68bn, up from £1.64bn in 2008. Tuesday, 29 December was the busiest day post-Christmas, with transactions adding up to £376m.

On Christmas day this year many people turned to their computer screens to continue shopping, with more than 700,000 transactions worth £24m processed, peaking at 12.08pm when 32 transactions a second were being handled. Online retailers accounted for £9.5m of turnover on Christmas Day, up 17% from £8.1m in 2008.

Retail experts have said that while shops appeared busier this festive season, consumer confidence is still fragile thanks to high unemployment and wider economic problems. The latest data shows the UK is still mired in its deepest recession since the second world war.

Much of the December sales rush has been attributed to shoppers racing to beat the rise in VAT, which yesterday went back up to 17.5% from the government's emergency rate of 15% over the last year.