Retail Eye Partners'  Instablog

The Big-Takeaways for July

-        Layoffs/Loss of income are once again causing consumers to be very budget conscious and as a result significantly cutting back on spending

-        To avoid temptation, consumers just aren’t shopping (for large or small purchases) and this is despite numerous clearance sales and high levels of promotion this month

-        Consumers want cheap! We’re seeing more trade-down to lower priced stores and more shoppers looking for the cheapest version of the item they need

-        Teens/parents are back in the mall looking for BTS and only buying when the price is deemed right.  And while they are buying, consumers are hunting for the best deals this year regardless if it takes more time and effort

-        Interest/spending at mid/higher priced women’s apparel remains abysmal

The Results Please!

July Brings Another Downturn in Household Financial Stability and Increasing Layoffs/Loss of Income is the Reason

-        Household financial situation is on the move again and not in a positive way, as we see a drop to 61% of panelists who think their financial situation is the same as last month (down from 63% last month), with 26% of panelist feeling their situation is slightly to significantly worse than last month (up from 22% last month)

-        Layoff fears are on the rise as well and likely the reason panelist are feeling worse about their financial situation, as 39% of panelist feel that someone in their household could get laid off or receive lower income this year (up from 32% last month)

-        We’re seeing more optimism for the future, though, as more consumers believe that their financial situation will get better, with 49% who think their financial situation will improve (vs. 37% last month)

-        Confidence in the economy has stabilized and while not great numbers at least far improved from the Recession lows experienced in February, as only 37% of consumers feel the US economy is getting worse this month (vs. 34% last month and vs. 73% in February!), and 26% believe it is improving, vs. 22% last month (and 6% in February!)

With Worsening Financial Situations, Consumers are Once Again Cutting Back on Spending and this Time it’s pretty Significant

The biggest changes this month

-        Fewer shopping trips overall (69% of panelists vs. 64% last month)

-        Shopping at less expensive stores (55% vs. 47% last month)

-        Postponing major expenditures (47% vs. 40% last month)

-        Buying the cheapest version of items on their shopping lists (46% vs. 43% last month, the highest level TY)

-        Cutting back on discretionary items (apparel, travel, eating out, consumer electronics) (63% vs. 60% last month)

Spending on Apparel and Accessories Sees Another Cutback

-        Women who are majorly decreasing their spending rose to 35% for July (the highest TY)

-        And major cutbacks for the family as well, rising to 30% for July (again the highest TY)

Most Retailers saw Declining Trends in Browsing and Conversion Levels as Well as Total Spend this Month

-        For our women’s apparel retailers, browsing and conversion levels remained pretty flat to slightly down to last month with spending down for the majority of the group (particularly mid/higher end specialty players).  Overall, spending is still focused on sale or coupon items, however, future spending plans remain flat to down across the universe except for our discounters who all saw a significant rise plan to purchase levels (TJX, Marshalls, DSW, Old Navy)

-        For our broadline retailers, all metrics were flat to down for everyone in the universe, except Nordstrom due to the Anniversary Sale

-        For our teen retailers, browsing levels were flat for most of the universe vs. last month, although many did see better conversions as teens with parents in tow were in the malls starting to buy for BTS

-        For our home retailers, we saw flat to slightly improved browsing and conversion but better levels of spending as end of season sales on gardening and outdoor appealed to our panelists as well as some early promotions on Back-to-College necessities

-        By region, for our apparel and teen retailers we saw declines in browsing and conversion in every market, while our broadlines retailers experienced more mixed results with the Mid-west, Mid-Atlantic and Southeast all experiencing rises in browsing and conversion


Disclaimer: No positions

Consumer sentiment showing continued stabilization from last month

-        Household financial situation has stabilized, as 63% of panelists think that their financial situation is the same as last month, and a few more feel it is better than last month (15% vs. 13% LM) , although 82% of consumers continue to  feel their financial situation is the same or worse than LY

-        We’re seeing less optimism for the future, though, as fewer consumers believe that their financial situation will get better, with 37% who think their financial situation will improve (vs. 42% last month) and more panelists think it will be worse, at 8% vs. 5% last month

-        Layoff fears, though, are less prevalent in consumers’ minds, as 32% feel that someone in their household could get laid off or receive lower income this year (down quite a bit from 40% last month)

-        Confidence in the economy has stabilized, as only 34% of consumers feel the US economy is getting worse this month (vs. 43% last month and vs. 73% in February!), and 22% believe it is improving, vs. 19% last month (and 6% in February!)

All shopper metrics improved at least slightly for the second month in a row with a few seeing significant improvement

Strong improvements seen:

-        Many fewer shoppers continuing to cut back on discretionary spending (60% vs. 68% last month)

-        Many fewer are postponing major expenditures (40% vs. 47% last month)

-        Many fewer are cutting back on small indulgences (40% vs. 48% last month)

-        Fewer shoppers are cutting shopping trips (64% vs. 67% last month) – in spite of rising gas prices this month

Slight improvements seen:

-        Slightly fewer shoppers are using more coupons (54% of the panel this month vs. 55% last month)

-        Slightly fewer are shopping at less expensive stores (47% vs. 49% last month)

-        Slightly fewer shoppers that are shopping closer to home this month (34% vs. 36% last month), in spite of rising gas prices this month

-        Slightly fewer are looking for the cheapest version of items on their shopping lists (43% vs. 44% last month)

-        Slightly fewer are buying less on sale (74% vs. 72% last month)

Spending on apparel and accessories is still constrained, but slightly looser purse strings for some in the family

-        Women cutting back on purchasing apparel and accessories for themselves has stabilized (78% still cutting back vs. 79% in May)

-        But women are loosening up the purse strings slightly for their families, with 72% of consumers cutting back on apparel and accessories purchases for their families vs. 77% in May

Most retailers saw similar trends as last month, with a little boost for the July 4^th holiday weekend

-        For our women’s apparel retailers, browsing levels remained pretty flat to last month, although conversions and even total spend increased for some of the retailers in the group.  Overall spend is still focused on sale or coupon items, however, future spending plans remain flat to down across the universe

-        For our broadline retailers, browsing levels were similar to last month, with WMT seeing improved conversions

-        For our teen retailers, browsing levels were flat for most of the universe vs. last month, although many did see better conversions as teens were back in the mall toward the end of the month

-        For our home retailers, we saw improvement in every category of home, as pent-up demand got some shoppers buying, with the best improvement in spending at BBBY

-        By region, the West saw conversion improvements in women’s apparel and broadlines after mixed performance last month, while the Midwest saw declines in conversion for women’s apparel but not broadlines and the Mid-Atlantic saw conversion declines in broadlines but not in women’s apparel.  The Southwest, Southeast and Northeast were mixed this month

Although consumers believe trends are slowly improving, they are loosening their purse strings only slightly, as worries about the future remain.

Disclosure: No positions

Bye bye Miss American Pie! - This season sees a major shift in teen girl’s fashion cycle moving away from preppy Americana towards fashion forward looks for the first time in years…and the result brings into favor a whole new selection of retailers.

Hello Fashion!
After years of the preppy, Americana look dominating teen girl’s fashion, we are finally seeing a major change in style which began to show relevance starting with the Spring season, and has only grown more popular as Summer sets have arrived at retailers.  Our 115-member proprietary Teen Panel tells us that the new look involves more fashion and runway trends, with the overall style looking reminiscent of 80s rocker styles, and emulating more and more celebrity fashion.  In the malls and at school, teen girls are choosing shorts with a printed/graphic tank or tee, skinny jeans or leggings with a flowy, printed top, and dresses, dresses and more dresses.  Shorty shorts are the shorts length of choice, paired with a variety of top options, with tanks being the teen favorite.  Key colors are no longer muted and vintage, but brights and neon with sparkle, studs, acid-washed and metallics important in detailing.  Solid colors are out and prints and patterns are definitely in for teen girls this season.  Most interestingly, brand logos are on the wane, with fewer logo’d looks being popular at schools.  And for the first time in quite a few years, we are seeing teens accessorizing looks with bold jewelry, scarves and trend-right footwear.  This is the first season where the flip flop is actually seeing competition as the primary shoe choice with gladiator sandals, ballet flats and wedges all providing dressier options to match with the more fashion-forward looks. 

Look out A&F and American Eagle 
In a nutshell, Abercrombie & Fitch and American Eagle are “out” (and in fact, both companies missed Wall Street expectations for May same store sales metrics), and Forever 21, Charlotte Russe, Wet Seal, Buckle and Pac Sun are the “in” teen stores of choice this season.  While teens are still searching for the most bang for their buck, they are shopping at more varied retailers this season: from Target to Macy’s to Forever 21 to find the right pieces at the right price and create their own unique looks.  We think the shift in teen girl’s fashion will continue through the Summer into the Back-to-School season, with skinny jeans and fashion tops being the look of choice, mixed in with more dresses and long tunic tops with leggings.  And that means that we will likely see the Americana-oriented brands continue to fall from favor for BTS unless they make major updates to their offering.   Bye bye A&F and AE, hello fashion forward retailers!

 

Disclosure: No positions