Consumer Sentiment Still Negative Long-Term

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Includes: BBBY, IPD, WMT
by: Retail Eye Partners

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% last month) , although 82% of consumers continue to feel their financial situation is the same or worse than last year.
  • 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:

  • Fewer shoppers continuing to cut back on discretionary spending (60% vs. 68% last month).
  • Fewer are postponing major expenditures (40% vs. 47% last month).
  • 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 4th 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