The savvy online shopper may be retail”™s saving grace following an S&P dip that rocked consumer confidence already compromised by the debt-ceiling crisis.
“It”™s the big winner that”™s growing like crazy,” said Howard Davidowitz, chairman of Davidowitz & Associates Inc., a national retail consulting and investment banking firm in New York City. “People can do price comparisons. They don”™t have to go from store to store. Expect it to continue double-digit growth.”
Consumer spending in general experienced a “sharp falloff in the last couple of weeks,” he said, but there are signs of life. The success of the back-to-school shopping season will depend on developing market conditions.
Nationally, retail sales overall were up .3 percent in July from the previous month, according to the latest National Retail Federation numbers.
Sales at clothing and clothing accessories stores were up .5 percent in July, while electronic and appliance stores sales increased by 1.4 percent.
Best Buy, which has stores on Central Avenue in Hartsdale and Yonkers, launched a virtual “Making the Upgrade” back-to-school feature, making it that much easier to pick up an iPad or e-reader for tech-savvy tykes.
A promotion called “Store Pick-up Plus” promises parents a 45-minute pickup window, matching their needs to the closest in-stock store ”“ saving travel time and hassles.
Retailers are driving walk-ins to their websites with promotional coupons or online incentives.
“There”™s no doubt about it,” Davidowitz said, of this drive for digital business. “The consumer is going to be totally focused on price because they”™re scared out of their wits. Washington is dysfunctional and deranged and if you”™re a consumer, you”™re thinking about paying down debt. ”¦ 25 percent of houses in America are under water. We”™re in a catastrophe state.”
Retail powerhouse Wal-Mart, which accounts for some “10 percent” of consumer spending in the U.S., Davidowitz said, experienced a 5.7 percent increase in sales for the second quarter and there are reports of a restructuring of its online business to greater compete with Amazon.com.
The discount mega-retailer, with stores in Mohegan Lake and White Plains, has plans to further integrate the web-based consumer with “Site to Store” and “Pick Up Today” cross-channel operations, which account for about 60 percent of its online sales.
And those sales are not driven solely by a lower- to moderate-income shopper.
“Ten to 15 percent of the population (the luxury sector) accounts for 40 percent of overall spending in this country,” Davidowitz said. “The wealthy shop everywhere, not just Neiman Marcus. The only thing that”™s salvaged the economy is that sector. If the markets now get unnerved, you”™re guaranteed (a) double-dip (recession).”
Though consumers are wary, in the latest Household Debt and Credit Report, the Federal Reserve Bank of New York recorded a modest increase in consumers”™ willingness to borrow and on the flipside, banks”™ likelihood of lending.
For the second quarter, credit-card limits increased by 2 percent and account openings grew by 10 million.
Andrew Haughwout, a vice president of research and statistics at the bank, stated in the report that “outstanding consumer debt remained essentially flat, down just $50 billion,” referring to it as “evidence that the pace of consumer deleveraging that began in late 2008 has slowed.”
