Geezeo's  Instablog

 An oft overlooked indicator of consumer confidence and, thereby the overall state of the economy, involves low-cost consignment retailers. The more people frequent and spend at stores like Goodwill or The Salvation Army, the less they are shopping at mainstream chains and malls. As was summarized Tuesday by Reuters' "Drop in retail sales weighs on stocks", recent indicators of stabilization may have been mistaken or have not traveled down to the average consumer, especially if they are worried about becoming unemployed.

MSSI figures through March-09 illustrate that the average Geezeo shopper visiting stores operated by Goodwill Industries has both increased his or her monthly spending and increased the amount of trips in the month. Looking at data for the last twelve months reveals a more than 28% increase in frequency as well as a year on year jump of 36% in spending. Observing these trends from the beginning of the year indicates that this spending increase is continuing, with Geezeo users increasing monthly spending by almost 25% overall since December. This can be attributed to the increased customer traffic to Goodwill locations prompted by higher unemployment and a relatively bleak outlook for the short term. This being the case, however, it is also important to note that this higher volume of customer has increased its average outlay per trip by 8.5% compared to March a year ago. Interestingly, the increased frequency of customers to another discount retailer, Sears (NASDAQ: SHLD) subsidiary Kmart, has not led to increased revenues. In fact the opposite has been observed. Kmart's first quarter saw three straight months of spending declines, which total more than a 37% average spending decrease from December's holiday figures. Year on year statistics are not as drastic, showing an only 10.77% decrease at the retailer.

The recent improvements to consumer confidence has been seen at some restaurants and retailers, as was discussed in "Recipe for Success" and "MSSI Monthly Movers: March". The effect this shift has had on grocery chains, however, has been varied.

Across all grocery chains tracked by Geezeo's MSSI, consumers' average monthly spending has remained relatively unchanged in 2009, only increasing by an overall of 0.1% from December of last year. Gains over the last twelve months have been only a moderate 6.39% as well. These facts do not tell the full story.

Several large grocery chains have been affected differently by the the last twelve months of economic uncertainty. Supermarkets under the Kroger (NYSE: KR) umbrella, as well as Publix (OTC: PUSH.OB) stores both have seen strong 12-month spending increases of 14.9% and 16.8% respectively, boosted by consumers going out to eat less. This trend has had almost the exact opposite effect for natural food retailer Whole Foods Market (NASDAQ: WFMI), which MSSI statistics show has seen an overall decrease in monthly spending of just under 10% from a year ago.

March results are starting to come out and, unsurprisingly, restaurants that committed to aggressive cost controls and addressing their margins head on have reported better-than-expected first quarter results. Two of these chains are California Pizza Kitchen (NASDAQ: CPKI) and Ruby Tuesday (NYSE: RT).

Both of these firms beat Street expectations, since, as is reported by Reuters in the article "California Pizza shares rise on better Q1 outlook", tighter operations combined with lower commodity prices have surely helped sustain profits. MSSI monthly spending data shows that consumer spending at these two retailers also helps to explain the success seen at CPK and Ruby Tuesday restaurants.

Over the last twelve months, average spending at CPK has increased 20% and at Ruby Tuesday by more than 6%, which seems to indicate that the dining out sector has already begun its comeback from the recession that started back in December 2007.

You would think that Best Buy (NYSE: <a href="http://www.thestreet.com/quote/BBY.html" target="_blank">BBY</a>) stores would be seeing at least similar spending levels as last year, maybe even increases due to the retailer's main competitor going out of business. Recent MSSI statistics, however, show that the tough economic conditions are keeping Geezeo users spending less on their electronics and media. MSSI monthly spending has dropped by almost 7% since December and in the last twelve months an overall decrease of 5.67% has been observed. With weak consumer confidence this is not necessarily a surprise, however, it is indeed worrisome for Best Buy.

Looking at the customer frequency shows that compared with March 2008, the average Geezeo Best Buy customer increased their shopping there by 2% year over year and almost 4% overall in the last twelve months, which means that shoppers are spending less per trip. This trend, however, has slightly reversed in the last three months, with customer frequency lower in each month compared to December's figure.