Weary consumers kept their wallets tightly shut in July and the trend looks as if it might continue through the back-to-school season, a time when retailers normally see a boost from parents getting their kids ready for the new school year.
Retail sales fell 5 percent as shoppers continued to worry about their jobs and spent more cautiously because of the recession, according to the International Council of Shopping Centers. Shoppers also had nothing to entice them to spend because there were fewer sales. Retailers have been keeping their inventories leaner this year, meaning they had less merchandise to get rid of.
Macy's Inc. department stores reported a 10.7 percent sales decline for the month, while Abercrombie & Fitch sales plunged 28 percent. Showing, perhaps, just how price-conscious consumers have become, discounters and off-price stores made the biggest strides. TJX Cos. - the owner of TJ Maxx, Marshall's and other discount retailers - posted a 5 percent sales gain, while sales at Kohl's rose 0.4 percent.
Parents will continue to be frugal throughout the next month, even as they buy their kids needed supplies and clothes for school, analysts said. Even teenagers, normally big spenders, are cash-strapped as they've had to compete for jobs with adults out of work. Sales at teen stores plunged an average of 9.9 percent in July, according to Retail Metrics, a company that tracks retail spending.
"There is not good momentum heading into the back-to-school season," said Ken Perkins, founder of Retail Metrics.
The average family with students in grades kindergarten through 12 is expected to spend $548.72 on school items this year, down 7.7 percent from $594.24 last year, according to the National Retail Federation. The trade group found that parents will be buying necessities and basics, such as shirts and jeans, and not spending much on trendy items and designer duds. Some parents will even have their kids cut back on pricey extra-curricular activities to help save money.
"Families will pinch their pennies wherever they can," said Kathy Grannis, a spokeswoman for the NRF.
Retailers have launched back-to-school campaigns that stress "value" and use social media and other innovative ways in hopes of getting that consumer dollar.
JCPenney has a Teen Facebook page as well as a teen component to its Web site, jcp.com/teen, that features a digital runway show. The department store has also launched new private label brands (which tend to be cheaper than designer names), including RS By Sheckler and Decree.
"It continues to be a challenging year for all retailers," said Quinton Crenshaw, a JCPenney spokesman. "While consumers are still quite discretionary with their spending, we are seeing a great response to the newness and innovation in our assortments ... as well as a great reaction to our promotional prices."
Sears and Kmart are offering layaway to give shoppers more time to pay for back-to-school items. K-Mart has brought back the blue light special, where a blue light flashes with different deals throughout the day. Sears has created a Facebook page, which includes a feature where students can decorate a dorm.
"So far we've seen a positive customer response and hope that will continue throughout the season," said Tom Aiello, a spokesman for Sears Holding Co., which owns Sears and Kmart. Aiello acknowledged, however, that the environment is tough for all retailers.
Parents had already started shopping for their kids Thursday at the JC Penney at the Mall in Columbia.
Jill Hack was buying a new school wardrobe for her daughter, Lexi, who has grown a lot this summer. "I came back from camp and my whole body had changed," said 9-year-old Lexi, who is going into fifth grade.
The Hack family has definitely felt the impact of the economy. Jill Hack said her husband lost his job this year, although he eventually found another one. She started to work two jobs to help the family catch up on bills from when he was out of work.
Hack said she is not limiting her kids' spending (she also has a son) too much, but said that she is being more cautious, hitting as many sales as she can.
Rose Hogue was buying school clothes for her granddaughter Kaya, who is 11 and going into the sixth grade. Kaya's mom recently lost her job, so Grandma has had to help out. Rose Hogue said she'll spend a couple of hundred dollars less on Kaya's school clothes than last year. And the clothes she buys will have to last the whole year.
"I'm definitely doing less this year," said Hogue, who lives in Silver Spring but was shopping at JCPenney in Columbia. "We have a budget to stick to."