Jackie Carrillo and her teenage daughter Gabriela are like many
shoppers these days. They will spend money, but they also want a
bargain.
Jackie Carrillo and her teenage daughter Gabriela are like many shoppers these days. They will spend money, but they also want a bargain.
The suburban Chicago mother and daughter found a nail salon that gives $12 manicures. They manage their fashion budget by shopping at outlet malls and sales. And they are buying used schoolbooks this year.
But then the urge to splurge came creeping up and Gabriela, 15, blew her weekly allowance on a new line of makeup from MAC, charmed by the artistic images on the cosmetic company’s Web site. It’s an indulgence she says that she won’t repeat after discovering similar products for less at the drugstore.
“It’s a lot more rewarding to come home with a shopping bag of things for the same price you’d spend on one item,” Gabriela said.
It was bound to happen. Consumers are tired of penny pinching and those with the means are itching to splurge. In fact, one in four women are ready to treat themselves to a new outfit, a vacation, a night out or something for the house, according to consumer behavior research firm WSL Strategic Retail.
Look around and there are signs that some consumers are willing to lift their heads out of the bunker after more than a year of recession and spend some cash. Computer company Apple Inc. is selling loads of sleek iPhones. The federal government’s “cash for clunkers” deal unleashed so much demand for cars that the program ran out of money. And Time magazine reports that Facebook somehow managed to sell $42 million in “virtual gifts” for sending to Facebook friends. (An icon of a unicorn, anyone?)
Yet overall, retail sales continue to plummet. When the major retail chains reported monthly sales, the International Council of Shopping Centers predicts sales, excluding Wal-Mart Stores Inc., was down 5.5 percent from the year-ago period, the 12th consecutive month of decline.
The fact that retail sales are stuck in reverse is in part a self-fulfilling prophecy, experts say.
The economic downturn has not only made shoppers reticent to spend, but it has frightened retailers away from taking risks.
Lean inventories, low prices and continual discounts have overshadowed creative merchandising and left shoppers cold, even if they might be willing to spend.
“The state of the economy has clearly intimidated most retailers to take this supposedly safe approach,” said Wendy Liebmann, president of WSL. “As a result, there is almost nothing enticing in any mall or on any Main Street this season.”
Interviews with shoppers suggest that just below the surface of a mindset focused on surviving an uncertain economy there is again the beating heart of American consumerism. It’s not as over the top as it once was, but the urge to buy new things is there.
Ginny Lezama hasn’t been shopping much lately, and crowed about a coupon that gave her a ribs and slaw dinner for two for $10. But then she also found a pair of slacks at the Limited “she just loved” and spent $54.
For Nanci Tomaras the indulgence was quite modest. She’s avoided shopping because times have been so tough, but she indulged in a small pleasure: a $4 pistachio ice-cream cone. “I haven’t given myself things,” she said.
Economists who have spent most of their time chronicling other recessions say it’s inevitable that pent-up demand will lead to some kind of breakout of spending. The official indicators aren’t there yet, but the stock market is stronger, and the housing market appears to be near bottom, which bolsters confidence.
What has to happen next, the experts say, is that retailers need to do a better job of capturing that nascent desire to spend.
Department stores in particular are at risk because they focused on lowering prices and keeping fashion “safe,” Marie Driscoll, a Standard & Poor’s retail analyst, said in an Aug. 3 report.
Wall Street will be keeping a close eye on Nordstrom Inc. in particular.
The Seattle-based department store held its 17-day anniversary sale in July. The annual sale of new fall goods historically makes July the second-biggest month of revenue for Nordstrom. Prices were low, but there was no “wow factor,” said Driscoll, leading her to believe that the sale results will be disappointing.
“I can’t think of any fashion item that will sell like wildfire this fall,” said David Wolfe, creative director at New York-based Doneger Group. “Retailers want it to look fresh and new, but they want it to be a proven success. They want ‘proven newness.’ It’s the Holy Grail of retail.”
