Although retailers saw a modest sales uptick in the month of June, recent reports on the economy and the mood of shoppers suggest a slow recovery ahead.
Kantar Retail, Columbus, Ohio, last week said its monthly ShopperScape survey revealed a pessimistic consumer outlook. The survey showed that shoppers' plans to increase spending during the coming four weeks decreased by 1%, while their plans to decrease spending rose by the same amount. And while shoppers felt better about job security and the value of their homes and investments than they did a year ago, concern increased over credit-card debt since last year.
Kantar's studies indicated that consumers expressed feelings of sadness and helplessness related to the Gulf of Mexico oil spill, and worry that they could feel its effects in the form of more expensive fuel and seafood.
Retailers in the meantime eked out slight gains in spending during the month of June, helped in part by a late Memorial Day holiday.
A weighted composite of 31 retailers reporting monthly sales results for the five weeks that ended July 3 showed a same-store sales gain of 3.2% — up from 2.7% in May and well ahead of a 4.7% decline in June of last year.
“The June results are positive, but the recovery in retail sales will be challenged in the coming months as long as doubts grow among shoppers,” said Frank Badillo, senior economist at Kantar.
The U.S. Department of Commerce last week in its monthly advance report noted that grocery store sales increased by 1.3% compared with June of last year, but fell 0.6% from May.
Some observers noted opportunity amid the sluggishness. Kantar said its survey indicated that the percentage of consumers planning to increase back-to-school spending (21%) exceeds those planning to spend less this year (19%).
Northbrook, Ill.-based consultant DSR Marketing Systems in the meantime noted the slow economic recovery could provide numerous opportunities for food retailers.
DSR in a report last week highlighted the need for retailers to look for opportunities beyond just waiting for inflation to return. “Significant inflation is no sure thing in the present economic environment,” noted author David S. Rogers, president of DSR.
However, he said opportunities should abound for those who pursue hard discount concepts; fight to win “meal solution” trips that might otherwise go to restaurants; and provide value in areas where consumers are prepared to pay premium prices — such as natural and organic foods.