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America’s Research Group is estimating this decrease based on interviews with 3,000 shoppers from May through July, while marketing consultant Brand Keys is forecasting a 6 percent hop to $275 in average spending per household on apparel. While that would slightly exceed a projected 5 percent increase in overall b-t-s spending, to $590 per household, it would still lag well behind the average annual gain of 10 percent for the past eight years. The Brand Keys 2008 forecast is based on a survey of adults in 10,000 households, drawn from the nine U.S. Census regions.
A lot of the action is likely to transpire at discount stores, where eight in 10 consumers are expecting to shop for the coming school season. Just three in 10 were planning to visit apparel shops and half said they’d be heading to department stores. This year, said Robert Passikoff, president of Brand Keys, consumers polled in 10,000 households said, for the most part, they will be looking for stores “offering the best prices for the things they need most.”
“The question is: Do people buy clothes without seeing a discount of 40 to 60 percent?” said Britt Beemer, chairman and founder of America’s Research Group. “I think the answer is no.” Stores such as Target, Kohl’s and J.C. Penney, he added, are still getting “some credit” from people for offering the “looks they want for much less money.”
On both the July 4th and Memorial Day weekends, regional malls saw about 12 percent fewer visitors, compared with a year ago, among 1,000 adults ARG interviewed by phone, just after those weekends. At apparel stores during those holiday periods, mall shoppers decreased by approximately 16 percent. And in June, personal consumption rose 0.6 percent, lagging the 0.8 percent increase in inflation, the Bureau of Economic Analysis reported this week.
“[Regional] malls are less and less a place people are looking at” for shopping in general and apparel in particular, Beemer noted of the venues dominated by department and specialty stores.
Despite the weak consumer spending picture, Stacy Janiak, Deloitte’s U.S. retail leader, stated, “A sharp rise in the savings rate to 5 percent [in May] shows the bulk of the [tax] rebate money was not spent. Rather it was put into savings or used to pay off debt. This may provide consumers with more liquidity in the fall and could stimulate back-to-school spending.”
While expressing surprise that the spending plans of those surveyed by Brand Keys had dropped to only half their seasonal growth rate of the past eight years, Passikoff pointed out people’s budgets remain unchanged for some of the most expensive items — computers and peripherals like printers and software.