When times are tough financially, American’s shopping habits change. During good times we shop at apparel and department stores like Limited and Saks. Same-store sales in May fell 6.5% at specialty apparel stores and 3.5% at department stores, said Michael Niemira, chief economist at the International Council of Shopping Centers. “The less discretionary the spending, the better the performance” he said.
When things get tougher we head to value stores like Wal-Mart, Target and Costco. Overall discounters and wholesalers had a a 4.1% same-store gain in May.
As expected Wal-Mrt was one of the main shopping destinations for sumsumers in May as same-store sales rose 3.9%. Hot sellers were groceries, health and wellness, and entertainment items. Even the home area saw gains, with its first comparable-store rise in over two years.
Warehouse clubs also easily topped views. BJ’s Wholesale for one, saw a 13.4% same-store sales gain while Costco’s rose 9%.
Frugality has led consumers to trade down. Middle- to upper-income households, who typically shop at Target and elsewhere, are looking more at Wal-Mart, dollar stores and food discounters, says Frank Badillo, senior economist at TNS Retail Forward.
Target’s May same-store sales fell 0.7%, below views. The No. 2 U.S. discounter expects June comps to be flat to down 2%. Target is struggling because it’s more geared to discretionary items like clothes and home furnishings, added Ken Perkins, president of Retail Metrics.
“When the economy was in good shape (Target) outperformed Wal-Mart regularly,” he said.It is now losing share to its rival.
Without Wal-Mart, May same-store sales rose 1.6% — well below the 2.6% average gain in 2007. “It certainly doesn’t signal any revival in consumer spending,” Perkins said.
By Niemira’s calculations May’s same-store sales rose 3%.
“It was better than expected,” Niemira said. “But the breadth of the strength was limited to a handful of retailers.”
{ 0 comments… add one now }