Back to school shopping season looks depressing
Filed under: Economy, Earnings
It can't be a good omen that signs for back-to-school sales popped up in many stores around the 4th of July.
Retailers, however, have little choice but to use every legal means at their disposal to entice shoppers to come to their establishments. That means deals and discounts -- lots and lots of them.
"Retailers are basically pulling out the stops to bring people in stores," said Erin Armendinger, director of the Baker Retailing Initiative at the Wharton Business School of the University of Pennsylvania, in an interview with DailyFinance. "This is the toughest retail environment that most have seen in their careers."
The reason for their generosity is obvious: consumers remain skittish. Even Costco Wholesale Corp. (COST), which targets cost-conscious consumers, posted a decline in monthly sales. Wal-Mart, a Wall Street darling last year, whose shares have slumped 15 percent this year, no longer provides monthly sales. For its part, the National Retail Federation argues that the "worst is behind us."
Back to school is the second-most important selling period for retailers behind the December holidays.
There is some reason for optimism, however. Better-than-expected gasoline and auto sales pushed June retail sales up a whopping 0.6 percent, surpassing the 0.4 percent gain economists had expected, according to the Associated Press. Still, Armendinger points out that retailers -- who tend to be optimists -- are not ready to pop champagne corks yet.
"The U.S. consumer is used to spending," she said, adding that some argue that there is "pent-up demand" from consumers forced to be frugal because they were worried about the economy. Armendinger is not sure if she agrees with that sentiment.
In fact, as the AP notes, sales at general merchandise stores fell by 0.4 percent, an improvement from May's 1.7 percent decline. Sales at specialty clothing stores were little changed.
In the coming months, retailers will see if consumers are going to resume their old spending habits or whether the worst economic crisis since the Great Depression has turned us into a nation of cheapskates. For now, frugality is winning.
Looking ahead to December, retailers may see a rebound from last year's disastrous figures but not much of one.
"I don't think anybody thinks it's going to be great," Armendinger said.
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Reader Comments (Page 1 of 2)
7-14-2009 @ 4:08PM
Tami said...
Well this must be why Geithner, experts/e-con-o-mists believe the recession is receding. Jobs still being lost at around 500,000/month. Go to the grocery store no relieve there after everything went through the roof last year with $4/gallon gas and remains at that price today. The only thing that is receding is how far my paycheck goes.
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7-14-2009 @ 7:41PM
MICKEY said...
F back to school shopping.
7-14-2009 @ 4:36PM
George said...
It's pretty good outlook if you are a Sach's employee...Why?....
Correct me if I am wrong, but isn't Sach's profit mainly due to us taxpayers?... Your article yesterday said Sachs won $13billion from AIG through credit default swaps....... As I see it, that is taxpayers' money since we have coughed up $180billion to keep AIG afloat.........
Another way of looking at it is that we, the taxpayers, are also footing the grossly bloated Sachs payroll.....What do you think?...
And another thought, Paulson was a Sachs employee?
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7-14-2009 @ 5:02PM
timothy said...
Consumers have reduced spending b/c they have finally realized how deep in debt they really are !!!! PPL are carrying 7=10 credits cards in their wallets and some of thoes banks/cards have doubled the monthly minimum payments...... and sent out letters reducing the card limits. That made consumers nervous, resultin in a s and decrease in spendingurge in savings . I am seeing more scooters on the local roads and the SUV sitting on the curb with a FOR SALE sign on the window
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7-14-2009 @ 5:39PM
M said...
I BLAME only 1 MAN for this and that is our so-called President!!!!!!!!
Get rid of him!
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7-14-2009 @ 6:52PM
thec2u said...
Already did. You know the one that double the national debt in less than 8 years and spent over a trillion to invade acountry that did nothing to us under false pretense. Poor Obama, he inherit a mess.
7-14-2009 @ 8:50PM
Stopcomplaining said...
You know this is the leftover from the great Bush/GOP era! lol... We spend way to much on going to school like it was a NY broadway show. Plus they have fill the store with this crap already
7-14-2009 @ 9:29PM
Tammy said...
yeah,because everything was great until he took office ,huh?
7-14-2009 @ 6:18PM
MyKisa said...
...sandals and black pajamas soon to come to the government indoctrination centers
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7-14-2009 @ 6:51PM
MC said...
oh come on, obama wants the economy to tank, its his job to make the US as weak as possible and he is doing it on all fronts, make no mistake, wake up.
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7-14-2009 @ 7:45PM
teltech54 said...
People are going to keep saving and for good reason. Everyone is worried about their job, their mortgage payment, their energy bills, their food bills. Relief is in sight. But not for two or three years. First we have to get through the SECOND GREAT DEPRESSION. Keep saving and only buy the absolute essentials. Also look into Freecycle. Recycling things that people have no use for. Lots of times people have no use for something and instead of turning it into landfill material they will give it away to someone who can use it. How we survive is about to change drastically.
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7-14-2009 @ 7:57PM
Clancy said...
When do we the consumer start placing some of the blame on ourselves for the state of the economy? We talk about our government spending money they don't have, when a lot of us, myself included have lived beyond our means for years. Even I knew a plastic economy couldn't last forever.
No, I don't have the answers for our nation or the people, I only know what I have to do to keep my ship afloat.
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7-14-2009 @ 10:37PM
Beth said...
And where did all the people get the plastic??? Yes, the GREEDY banks handy out credit cards like Halloween Candy....the banks were(still are) greedy and LOVED people charging up cards....then they raise rates, charge exhuberant fees for this-that-and everything in between....for years people have been scraping by on this "plastic economy".... but now with so many jobless....food and electricity takes priority over paying these bottom-feeding banks who took the gamble giving away too much un-secured credit cards.....if the banks/credit card companies didn't give them out, people couldn't have charged them up!
7-14-2009 @ 8:08PM
Winnie said...
Obama wanted to get going when he won the Presidency, and he ain’t stop moving to: Ghana, Russia, Italy, and where ever he is flying tomorrow.
The only thing Obama has managed to “Change” is from a commercial flight to Air Force One.
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7-14-2009 @ 8:10PM
marigwanna420 said...
think the economy is bad now??? wait and see what is going to happen..... all those speculators that are driving the stocks up from the lowest they were are going to ruin this country.... nothing is better.... everything is worse.... stop lying and trying to cover up mistakes!!!!!!! we are in the midst of the Second Great Depression plan accodingly
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7-14-2009 @ 8:46PM
Tech said...
Thanks David Rockefeller and Goldman Sachs for causing the second "Great Depression". They stick in an unelected stooge GW Bush and pull 911 then invade Iraqistan for the oil and Caspian gas then launch a police state here and have their CIA creeps mail some anthrax around with Cheney&Co. being told by Kroll Security to be taking Cirpo well before? Yeah, then they drop interest rates and sell MSB's all over and then cut credit causing the biggest drop in world history while shorting and making trillions. Welcome to the New World Order baloney run by a few old geezers and a totally controlled life. I'ts some weird fascist/communist police state. Unlike Rollerball the corporate bankers cannot provide a good life to all so billions will suffer. The controlled media is just propaganda now and keeps the real news off. At least the internet can now download porn faster! Beer, boobs, baseball, and baloney life is a strange experience.
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7-14-2009 @ 8:49PM
Stopcomplaining said...
Is this about going back to school Inc or are we remembering the gtood days when Bush said stop worring I did go shopping you sheep I mean flag waving Americans.
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7-14-2009 @ 8:50PM
alvinsilv said...
I see a lot of people struggling with their finances or moaning about them. It doesn't have to be that way. I learned a lot about spending, SAVING and living a "richer" life from the book "How to Become Filthy Rich on Your Current Income" at www.how-to-become-rich.com. If people read books like this one we would not have the current situation we do.
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7-14-2009 @ 10:31PM
robin said...
IMPEACH OBAMA, BIDEN. PELOSI & REID. LET S TAKE OUR COUNTRY BACK BEFORE ITS TOO LATE.
OBAMA IS NOT AN AMERICAN BUT A KENYAN WAKE UP AMERICA!
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7-15-2009 @ 8:21AM
M said...
I agree. It's time to get things going in Impeaching Obama
and the 3 Stooges.