WASHINGTON — Sales at specialty stores fell in September, while department store sales remained flat, in line with weak overall retail sales last month, the U.S. Department of Commerce’s monthly report showed Wednesday.
The National Retail Federation also released a new study on retail wages Wednesday, seeking to dispel what it calls “myths” about the industry’s wages.
Sales at apparel and accessories stores fell a seasonally adjusted 1.2 percent to $21.1 billion last month, while sales at department stores remained flat at $14 billion. General merchandise stores, a category that includes discounters and department stores, posted a 0.2 percent increase to $55.9 billion.
In the overall economy, retail sales fell 0.3 percent to $442.7 billion, falling steeper than many economists had predicted.
Chris G. Christopher Jr., director of U.S. Consumer Economics at IHS Global Insight, said “most retailers took a hit in September,” including auto dealers, apparel, furniture and sporting goods stores.
“In August, consumers got most of their back-to-school and automobile spending out of the way,” Christopher said. “When September rolled around, they took a breather and decided to wait in line and get the newest Apple iPhone.”
IHS has lowered its third-quarter real consumer spending growth, based on the retail sales report, to 1.8 percent from 2.1 percent, though it remains optimistic about more recent positive news, such as falling gasoline prices.
“I think you saw a fairly weak back-to-school season and in the apparel sector I believe a lot of retailers, especially on the specialty side, are being hit with a lot of markdowns that they need to take,” said Keith Jelinek, senior managing director of FTI Consulting.
Jelinek said retailers across the board appeared to miss the mark when it came to hot fashion items to drive the business, adding “it was a general miss across the board from a trend perspective.” But he also attributed the weakness to rising consumer debt and “angst” associated with a still-soft labor market.
“When you dig deep, you see there is the underemployed and part-time employed [pool] that want to be full-time folks and that has left its mark,” he said. “Top-tier consumers and the top 10 percent of earners of wealth still have income to spend on extracurricular types of products, but for the other 90 percent it is very much a buy basics only [perspective]. That is spilling over not just into apparel but we see that in groceries and other sectors, as well.”
The NRF released a study titled “Wages in the Retail Industry: Getting the Facts Straight,” compiled by Jeffrey H. Dorfman, an economist at the University of Georgia, on Wednesday that said “retail jobs pay wages highly competitive with other sectors.”
According to the study, “stable” retail workers defined as working all three months in a calendar quarter at a company, earn an average of $2,582 a month compared with $2,667 for non-retail workers. The study also found that “experienced” retail workers between 25 and 54 years old make an average of $3,198 a month compared with the $3,164 monthly earnings of non-retail workers.
The NRF has taken a firm stance against an increase in the federal wage rate and on Wednesday addressed criticism raised by NRF first vice chairman Kip Tindell, who is also chairman and chief executive officer of The Container Store. Tindell, who is in line to become the NRF’s next chairman in January, was quoted in a Bloomberg news story last week saying he wants to work the NRF to “moderate” its views on a minimum wage rate increase.
Stephen I. Sadove, current NRF chairman and former chairman and ceo of Saks Inc., said every business owner has to do what is right for their business operations.
“Our feeling as an industry is now’s not the right time to see a mandated increase in the minimum wage because we are in a stagnant economic recovery,” Sadove said. “It’s very fragile. Look at the volatility we are seeing in the stock market right now as an indicator. We would rather be focusing on what we can be doing in the near term to stimulate growth so that you have the capital foundation that is going to allow more and more companies to succeed. Adding an increased, forced mandate of higher wages on top of health care and on top of other mandates like that, we don’t think is the appropriate path as an industry.”