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Weak Spending Plans for Holidays, Shoppers Report

Retail same-store sales declined 0.6% in October for about 40 publicly held retailers reporting monthly results last week(Nov. 6) - as shoppers surveyed in October reported weak spending plans for the holidays, TNS Retail Forward reports (via Retailer Daily).

October’s same-store sales results are down from a 1.3% sales-weighted composite increase reported in October and down from the 1.7% increase reported in October of 2007.

“Shoppers are focusing on necessities and on finding the best deals as they cut back their spending. And that will continue through the holidays,” said Frank Badillo, senior economist at TNS Retail Forward.

October’s results were led by weak positive results at warehouse clubs and discount department stores. the declines were deep at apparel and accessory stores and department stores. (See list of the retailers reporting and their results [pdf].)

The weak results are foreshadowing weak holiday spending plans reported by shoppers in the latest TNS Retail Forward ShopperScape survey, fielded in October, after the federal financial bailout passed Congress, TNS said.

• Half of shoppers (50%) reported in October that they plan to spend a lot less or somewhat less on holiday gifts this year compared with last year. That’s a jump from the 31% of shoppers who planned to spend less at the same point a year ago.
• Just 7% of shoppers plan to spend a lot more or somewhat more on holiday gifts. That’s down from 13% that planned to spend more a year ago.

Below, additional findings from the TNS Retail Forward survey.

Discount stores, supercenters and warehouse clubs are among the few retail channels that are not being cut from the list of planned stops for holiday shopping.

Otherwise, shoppers are narrowing the number of store types where they plan to shop:

• Discount stores/supercenters top the list of retail channels that shoppers plan to shop for the holiday; they also have as many shoppers this year planning to do their holiday shopping at them as last year.
• Other lines of trade offering savings - warehouse clubs, factory outlet stores and small-format value stores - are also retaining their popularity with shoppers.
• Fewer shoppers are planning to buy via non-store channels - online and catalogs - although free shipping deals could be enough incentive to shift shoppers’ plans.
• Department stores and other apparel-related channels will face challenges as significantly fewer shoppers plan to shop those channels this year.
• Even channels focusing on leisure products, which have performed better than other channels, face the prospect of fewer shoppers. Consumer electronics, sporting goods stores and gadget/gift stores show declines in the percentages of shoppers intending to fulfill their holiday lists at them.

Among product categories, the video game category is the most notable exception to the cutbacks planned by shoppers. Otherwise, the cutbacks span a broad array of product categories:

• Exceptions to the planned cutbacks include the popular category of videogames, videogaming systems or related accessories and less popular categories of home décor or home-related furnishings and plants/wreaths/flowers.
• Gift cards, clothing, toys, and books remain the most popular gift categories, in the same order as last year, but all face a significantly smaller share of shoppers planning to make purchases of those categories.