Retail Sentiment Similar to Last Month, but Spending Hasn't Improved Over April

Consumer sentiment stabilizing at last month’s levels, which is still a significant improvement over the lows of February

Household financial situation is stabilizing, as slightly more panelists think that trends are the same as April, although 78% of consumers still do feel their financial situation is the same or worse than last year.

We’re seeing a bit less optimism, though, as fewer consumers believe that their financial situation will get better, with 42% who think their financial situation will improve (vs. 45% last month) although fewer think it will be worse, at 39% vs. 41% last month.

Layoffs are still a very real fear in consumers’ minds, as 40% feel that someone in their household could get laid off or receive lower income this year (up slightly from 39% last month).

Confidence in the economy has stabilized, as 43% of consumers feel the US economy is getting worse this month (same as last month, vs. 73% in February!), and 19% believe it is improving, vs. 18% last month, and 6% in February.

Shopper metrics saw improvement in May but apparel and accessories shopping continues to be cut back

Most May shopping metrics improved, with fewer shoppers using more coupons (55% of the panel this month vs. 64% last month), buying slightly fewer things on sale (72% vs. 75% last month), shopping at less expensive stores (49% vs. 55% last month), postponing major expenditures (47% vs. 50% last month), and shoppers making fewer shopping trips (67% of the panel vs. 70% last month).

As gas prices increased this month, we did see a rise in the number of shoppers that are shopping closer to home this month (36% in May, vs. 33% in April).

A few of our other metrics also saw slight increases, including shoppers continuing to cut back on discretionary spending (68% in May vs. 66% last month) and shoppers looking for the cheapest version of items on their shopping lists (44% vs. 41% last month).

Slightly fewer shoppers are cutting back on purchasing apparel and accessories for themselves (78% still cutting back vs. 80% in April), although overall levels are still quite high.

And women are still cutting back on apparel for the rest of their families, with 77% of consumers cutting back on apparel and accessories purchases for their families vs. 76% in April.

Most retailers saw similar trends as last month, with little boost from warmer weather and the Memorial Day holiday

For our women’s apparel retailers, browsing levels remained pretty flat to last month, and conversions and total spending decreased for many from last month. Purchasing was still focused on sale or coupon items, however, the good news is that future purchase plans have improved slightly for many in the universe over last month.

For our broadline retailers, browsing levels were similar to last month, with KSS seeing improved conversions and JWN seeing worse conversions.

For our teen retailers, browsing levels were lower for most of the universe vs. last month, with only select retailers seeing better conversions (AEO, ARO, Marshall’s (TJX)).

For our home retailers, we saw a little bit of an improvement in spending in kitchen and tabletop, as shoppers continue to loosen purse strings a bit, and we also saw better full-price selling, which is encouraging.

By region, the Mid-Atlantic saw conversion improvements in women’s apparel and broadlines after declines last month, while the Midwest saw improvements in conversion for women’s apparel but not broadlines. Meanwhile, the Southwest, Southeast and Northeast saw declines in women’s apparel conversions after seeing some improvement last month. The West saw lower browsing for most, while conversions were mixed in women’s apparel and broadlines.

Spring/Summer apparel shopping continued this month, but shoppers are being cautious and are still waiting to spend the rest of their budgets

Almost 3/4 of our panel has started to buy Spring/Summer apparel and accessories, although they have spent only about 42% of their total budgets to date (vs. only 37% last month), which tells us that shoppers remain very cautious on spending and are continuing to wait for the best deals.

The next month will see more Summer buying occur, as retailers offer more promo and sales continue.

Our teen panelists are staying frugal this month as well…

Teen spending remained conservative this month, with each of our teens saying they were looking for the “cheapest prices they could find” for tanks, shorts, dresses and flip flops.

Brands continue to become even less important this month as teens try to maximize the dollars they have to spend to update their wardrobes.

We heard more mentions than ever from our teens of value retailers such as Aeropostale, Old Navy, Target (TGT) and even Kohl’s as places they had been shopping for this season’s looks (versus last year at this time, when teens wouldn’t set foot in Target or Kohl’s).

What are teens wearing? For the girls, dresses are extremely popular this year as are shorty shorts with tank tops, and for the guys, a casual preppy/skater look of cargo shorts with a graphic tee or polo remains the primary wear.

Almost all of the panelists are looking for a summer job to augment money they are receiving from their parents (which continues to be pulled back) and we heard unanimously that it was extremely difficult to find employment right now, which could impact how much teens have to spend on back to school clothing later this summer.

Overall, teens want to shop but are remaining very frugal in terms of what they are spending on and from where.

Overall, not a lot of great news in May’s consumer panel results, as shoppers are still cautious with their spending, in spite of some stabilization in their financial outlook.

Disclosure: No positions