Retailers Skittish Over Consumer Spending
CASH registers may be ringing at stores throughout the United States, but the message from retailers is that consumers are spending as little as possible - and looking for lower-priced merchandise.
"There is considerable apprehension [within the retail sector] about consumer spending, where the US economy is going, and when new jobs will be created," says Kurt Barnard, publisher of Kurt Barnard's Retail Marketing Report, a monthly journal on retail trends.
The second quarter, ending in June, will be "a spotty quarter at best in terms of retail sales," Mr. Barnard says. "The quarter is likely to be flat, with sales up only 2 percent or so."
That follows a dismal first quarter, "which was just not good for a lot of retailers," Mr. Barnard says. In 1992, retail sales rose about 2.5 percent above 1991 sales, he says. Yet US retailers will be fortunate if they reach or exceed that level of growth in 1993. He predicts that total sales will rise only 1 to 2 percent this year, not even keeping pace with inflation.
Most major retailers, except for a few large regional chains, have released first-quarter sales and earnings. K mart, the second-largest mass retailer in the country behind Wal-mart, saw profits fall 57 percent. The decline was partly attributed to unseasonably cold weather earlier this year, which hurt sales of lawn and garden equipment, some household goods, and spring apparel.
Some companies, including Toys * Us and Lowe's, a building-supply retailer, have posted fairly good sales and earnings gains. But many other companies are expanding sales only by "marking down prices" through special promotions, says Janet Mangano, a retail specialist with Burnham Securities Inc. "Retailers are very skittish right now about the well-being of the economy and consumer spending; the retailers will tell you everything is fine. But I'm clearly hearing the nervousness in their voices."