Despite the cool, damp weather in much of the country and high gas prices that were blamed for drowning overall retail sales in June, supermarket operators polled by SN last week indicated their summer season has been a virtual picnic.
"We've done very well, and sales have been as strong as we expected them to be," said Jay Campbell, president and chief executive officer, Associated Grocers, Baton Rouge, La. "Part of that is due to the fact a lot of people were sticking close to home, though I'm not sure why that is. But our business stayed very solid through June, and we had an excellent Fourth of July."
Campbell said June sales were on target despite a lot of rainy weather.
In the overall economy, retail sales fell 1.1% in June, but remained 6.3% above a year ago, according to data released last week by the Commerce Department. The decline was driven in part by a drop in auto sales, reflecting a lack of incentives by auto dealers, analysts said. Higher gasoline prices also had an impact on consumer spending, with sales at gas stations rising 22.5% over June 2003, largely due to the higher prices.
"After several months of rising energy costs, gas prices have taken their toll on consumers and retailers," the Washington-based National Retail Federation said.
Some food retailers said the wet weather did appear to have some impact on their sales, but they said the overall positive momentum of increasing consumer spending prevailed.
Ron Pearson, chairman, Hy-Vee, West Des Moines, Iowa, said a damp Fourth of July weekend diminished consumer interest in certain traditional summer hot sellers like soda and beer, although total sales continue to be strong.
"People didn't do as much camping, picnics and that sort of thing," he said of the Independence Day holiday.
Despite the cool weather in June, he said the company had comparable-store sales of 5.88%, ahead of the 5.5% the company has been averaging for the year.
Sales of outdoor furniture were weaker than expected, however.
"We found that those plastic deck chairs were just not selling, because people backed away when they didn't think they were going to be eating outside with the family," he said.
He said the slowdown in sales of such items probably also was felt by Wal-Mart Stores, Bentonville, Ark., and Target, Minneapolis, both of whom reported soft comparable-store sales for June.
What's driving the overall sales gains at Hy-Vee, Pearson said, is that consumers appear to be trading up to more expensive items as a result of their increasing confidence in the economy.
"Consumers are back to buying [higher-priced] choices," he said. "We also find them purchasing more discretionary items that in a recessionary time, people backed away from."
Ron Marshall, president of Nash Finch, Minneapolis, said in a conference call last week the company had scaled back the level of promotions this summer.
"We were exceptionally promotional last summer, but we chose not to do that this year, so the comp-store comparisons are tough," he said. "However, we're doing better than we anticipated, and we expect that progress to continue."
Other retailers also said their sales this summer have met their projections.
"We've remained fairly on-track this summer," said Janine Dalman, spokeswoman for Felpausch, Hastings, Mich. "Obviously, the weather always plays into sales, but we're right on track as to where our budget said."
She declined to discuss sales figures or performance in specific categories.
Economists expect consumer spending to bounce back for all retailers as the second half rolls on.
"It's not surprising that consumers took a breather last month due to higher gas prices and unseasonable weather," said Rosalind Wells, chief economist at the NRF. "Retailers will look to the back-to-school season to offset June's sluggish sales."
Carl Steidtmann, chief economist at Deloitte Research, offered a more tempered assessment.
"The fundamentals of consumer spending are a little mixed," he said. "Mortgage refinancing has declined fairly significantly, the effects of the tax reductions are beginning to wane and wages are not going anywhere. But we have created quite a few new jobs -- 1.3 million -- since the beginning of the year."
