Shoppers Cautiously Pushed Up Spending in May

NEW YORK (AP) - Americans loosened their purse strings in May to update their wardrobes with bright new styles and take advantage of Mother's Day promotions.

Major retailers including Target Corp. (TGT), Macy's Inc. (M) and Limited Brands Inc. (LTD) all posted bigger-than-expected gains from a year ago. The modest but healthy gains followed a dismal showing in April, when retailers on average posted their weakest performance since November 2009.

"The pent-up demand is continuing to pour out a little," said Ken Perkins, president of Retail Metrics LLC, a research firm. "I wouldn't say it's happening in droves. But consumers are updating their wardrobes."

The positive results come amid broader indications that the economy is still struggling to recover. The Commerce Department said Thursday that the U.S. economy grew at an annual rate of 1.9 percent in the first three months of the year, which was slower than expected. Growth of 2.5 percent is typically enough just to keep pace with population changes.

The Labor Department on Thursday said the number of Americans seeking unemployment benefits rose last week to a five-week high, evidence that the job market remains sluggish.

And earlier in the week, the Conference Board said its consumer confidence index slipped to 64.9 in May, marking the biggest decline in eight months and ending a period of steady optimism. The figure is now at the lowest level since January.

Only a handful of retailers representing roughly 13 percent of the U.S. retail industry report monthly sales figures based on stores open at least a year, which is a key measure of health because it excludes the impact of newly opened and closed stores. But the figures nevertheless offer a snapshot of consumer spending, which accounts for more than 70 percent of economic activity.

Although modest, the gains in May are considered positive sign because retailers were largely up against strong comparison results from a year ago when the figure on average rose 5.4 percent, according to the International Council of Shopping Centers.

A variety of retailers posted gains:

- Discount retailer Target said its revenue at stores open at least a year was up 4.4 percent as shoppers spent more on its expanded food offerings and its cheap-chic fashions. The performance by the Minneapolis-based company beat the analyst estimate of 3.5 percent, according to Thomson Reuters.

- Limited Brands, the Columbus, Ohio-based parent company of Victoria's Secret and Bath & Body Works, said its sales were up 6 percent, which topped the 4.7 percent analysts expected.

- TJX Companies Inc. (TJX), which owns discount store T.J. Maxx, said its sales rose 8 percent, easily topping the 5.3 percent analysts had forecast. The Framingham, Mass.-based company said shopper traffic was up significantly across its departments.

• <p> Expect to see these gain popularity over the next 12 to 18 months. Augmented-reality apps offer consumers rich content -- be it on an item's features and benefits, or information that compares and contrasts various products to help shoppers make better on-the-spot, informed shopping decisions.<br /> <br /> So in theory, a supermarket shopper with health issues debating between several cereal brands could tap an augmented-reality app to pull up product information and &quot;compare this product versus three others,&quot; Fry says.</p>
• <p> And AR apps will likely move beyond the supermarket aisle: There are whispers that Walmart (<a href="http://www.dailyfinance.com/quote/nyse/wal-mart-stores/wmt" target="_blank">WMT</a>) and Best Buy (<a href="http://www.dailyfinance.com/quote/nyse/best-buy/bby" target="_blank">BBY</a>) will soon be launching augmented-reality apps.<br /> <br /> These apps are one way retailers are fighting showrooming, when shoppers use brick-and-mortar stores as showrooms to check out potential purchases, only to buy later from online merchants at a lower price, Fry says.<br /> <br /> &quot;Information is value. Consumers aren't just buying on the basis of the lowest-possible price, he says. &quot;Augmented reality apps will allow [retailers] to make a showroom that Amazon [for example,] will have difficulty duplicating.&quot;<br /> <br /> Fry says augmented reality-apps offer a more sophisticated evolution what retailers have been attempting with QR codes, the black-and-white matrix bar codes that have been popping up on everything from product displays to store windows.</p>
• <p> Lusting after a cool blouse or a sleek flatscreen TV but can't justify paying the steep price? Well, just as sites like FareCompare.com alert travelers when airfares drop, clothing store Bebe (<a href="http://www.dailyfinance.com/quote/nasdaq/bebe/bebe" target="_blank">BEBE</a>) and Best Buy now offer apps that will alert shoppers when an item goes on sale.<br /> <br /> &quot;Essentially, by using the retailer's app, a user can mark an item as a favorite and choose to be alerted when the product goes on sale, or reaches a price point specified by the user,&quot; Scott Gamble, vice president of digital solutions for AllianceData, which issues retail credit cards for stores like J. Crew and Pottery Barn, tells <em>DailyFinance</em>. &quot;Specialty, electronic, and hard goods retailers would be most likely to implement this type of tool moving forward.&quot;</p>
• <p> Alliance Data is now developing a &quot;virtual gifting&quot; mobile tool that it plans to launch as a pilot program later this year.<br /> <br /> &quot;The general idea behind this capability is that it would allow a cardholder of one [retail store] brand to send a virtual 'gift card' via a mobile device to another cardholder of the same brand,&quot; Gamble says. &quot;The gift could be redeemed in-store via the recipient cardholder's mobile device. Women's specialty retailers will likely be among the first to launch this sort of tool.&quot;</p>
• <p> While the jury is still out on how tablet computers will ultimately figure into the shopping experience, retailers are already starting to capitalize on tablets' advantage over smartphones, most notably, their larger screen size.<br /> <br /> Retailers are now leveraging tablets to help consumers do more than simply make purchases; the goal now is to help people solve more complex shopping problems like how to redecorate a room or piece together a wardrobe. The right tool for those project-sized tasks: Magalogs, hybrid magazine/catalog mobile sites that offer how-to advice and rich content, Fry says. &quot;It's about providing better context to make it easier for shoppers to purchase from these retailers,&quot; he says. The consumers can conceivably use retailers' mobile magalogs to walk them through a project in a store. They'll use their tablets to &quot;give me ideas and tell me how to execute a project,&quot; Fry says.</p>
• <p> Cosmetics chain Sephora, for one, <a href="http://www.prnewswire.com/news-releases/sephora-makes-over-the-future-of-shopping-146654935.html">announced this week the test roll out of iPads to 20 stores</a>, where they will give shoppers another way to navigate the retailer's thousands of products and interact with the menu of services offered by its Beauty Studio.<br /> <br /> Sephora just updated its online and mobile sites. Now, each product on Sephora.com is tagged and indexed with 25 different characteristics, from data like target age group, to specific ingredients, formulations, fragrance, price and more, in a bid to offer shoppers a targeted, personalized shopping experience.</p>
• <p> Some women's apparel chains are strategically placing QR codes in their stores -- in fitting rooms, for example -- so that shoppers can sign up for store credit cards on the spot, assuming that the shopper has both a camera and a QR-code reader on their smartphone.</p> <p> A shopper can scan the QR code, which connects them to the retailer's mobile-optimized website, where they're asked a few questions to apply for the store card, Gamble says. If qualified, &quot;they would receive approval within a minute or less.&quot;</p> <p> &quot;The QR code makes the application process very quick and convenient for the customer and, upon approval, almost immediately specifies their buying power -- their credit limit -- so they can immediately take advantage of the benefits of instant discounts and rewards that typically come with the initial card purchase,&quot; he says.</p>
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Stores such as T.J. Maxx and Ross Stores Inc. (ROST) have fared well in the recession, as shoppers increasingly turned to them for brand name items at discounted prices.

- Costco Wholesale Corp. (COST) said revenue at stores open at least a year was up 4 percent. That was shy of the 4.3 percent analysts expected, but lower gas prices and unfavorable currency exchange rates dragged down the number. Perkins of Retail Metrics also noted that the Issaquah, Wash.-based wholesale club operator had a particularly high hurdle to meet, given its 13 percent gain from a year ago.

- Macy's, which runs Bloomingdale's and its namesake department stores, reported its results on Wednesday. The Cincinnati-based company said its revamped offerings pushed up the measurement 4.2 percent, which was higher than the 4 percent Wall Street expected.