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Consumers’ Mood Glum For Back To School

08/29/2011

High unemployment, stagnant wages, gridlock in Congress, and a stock market slump have contributed to a consumer mood that was as grim as when Jimmy Carter was President during the recession of 1980 and interest rates were more than 20 percent.

This has put a real damper on back-to-school shopping, the second-biggest retail season of the year and often a preview of the holiday season. Sales numbers for August will be released on Thursday. So far, the trend isn’t particularly good.

There are bright spots on the retail horizon – but not always where expected.

Financial anxiety — or the New Consumerism, if you like — has been a boon to dollar stores. Same-store sales, a key measure of a retailer’s health, spiked at the three large (Dollar General, Family Dollar and Dollar Tree), publicly traded chains in this year’s first quarter — all were up by at least 5 percent — while Wal-Mart had its eighth straight quarterly decline.

At the other end of the retail spectrum, Tiffany & Company’s net income rose 30 percent in the second quarter, propelled by strong growth across all regions as high-income shoppers continued to be drawn to its jewelry and other goods. A Tiffany spokesman said demand for diamond rose 40 percent last year. Is this a buying strategy similar to the precious metal market fueled by gold? Most likely.

Analysts say that people’s spending doesn’t always correlate with their mood but I would offer the analysts should consider spending more time in the stores.

A trip to any retailer these days reveals fewer shoppers with mostly glum expressions buying only what they have to buy. A recent trip to the Mall of America in Bloomington, MN saw no shoppers with multiple bags. The MOA is not only a shopping mall but also a tourist destination. Tourists are spending more time at other facilities like water parks, Minnesota Twins baseball games, the Minnesota Zoo, etc. As recently as 2007 shopping was the focal point of tourism.

Holding our breath until Thursday’s results release will be difficult. I’ll bet anyone a quarter the numbers are down.

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One Comment leave one →
  1. Brandon permalink
    08/29/2011 7:08 am

    One other thought – even through the recession consumers have bought and bought and bought – maybe at this point they figured out they have enough stuff to last for awhile.

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