Struggling Spring Sales

May 6, 2005 - 11:32

Every year we all hope to have a hugely successful spring that has no rain, lots of sun and just the perfect temperature. So far this year that is definitely not the case. According to an article from the Associated Press (AP) unseasonably cool weather, high gasoline prices, higher interest rates, etc. “have made consumers pull back on spending in March and April, after going on a spending spree earlier in the year. And there's growing concern among analysts that this may not be a temporary pause, as the economy hits another rough patch,” the article stated.

"The pulse of the consumer has gotten slower," said John D. Morris, a retail analyst at investment firm Harris Nesbitt, in the AP article. "March and April are not pretty, and it suggests that the consumers are feeling the pinch of a slower economy, higher interest rates and gas prices."

“Morris estimated that discounting is up 20 percent for the March and April period for the 18 mall-based apparel stores he follows. That compares to a 10-percent decline in the spring 2004 period over the previous year,” said the article.

Something natural to this industry is lots of color, and now that the rest of the retail world has caught on, analysts think that new bright color trend is turning people off from buying.

“A year ago, major stores focused on pink while offering a sampling of other bright colors. This year, the nation's clothing racks have become a mishmash of different colors and prints. Except for the flowing circle skirts and tunics, not much else is selling, said David Wolfe, creative director at The Doneger Group, a New York-based buying office,” stated the article.

"When you give people too much choice, you can't make a decision," Wolfe added.

In early 2005 consumers opened up their pocket books more than analysts had expected for that time of year, but once March hit, the sales started slipping. “For the combined January and February period, sales at stores opened at least a year, known as same-store sales, averaged a 4.2-percent gain, according to The International Council of Shopping Centers-UBS tally of about 70 merchants. Same-store sales are considered the best indicator of a retailer's health,” said the AP.

“Wal-Mart Stores Inc. expects to post a 0.9-percent same-store sales gain for April. Its initial projection was for same-store sales to be up no more than 2 percent. Target Corp. has maintained that April sales gains will come in at the low end of its 2- to 4-percent projected range,” said the article.

According to the AP in April the U.S. government reported the overall economy grew at an annual rate of 3.1 percent in the January-March quarter making it the slowest increase in approximately two years.

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