Consumers pulled back on spending last week, and for fashion apparel sales September’s warmer weather may have delayed expenditures on fall items, which could create some pent-up spending that would help this holiday shopping season.
On that last note, PwC released its annual holiday spending report, and the research firm expects a challenging environment this year — especially for moderate-income families.
For the week ended October 3, the Retail Economist-Goldman Sachs Weekly Chain Store Sales Index declined by 0.4 percent as compared to the prior week. And year-over-year, sales gained a “very sluggish 0.7 percent relative to a 1.2 percent gain in the prior week,” said Michael P. Niemira, chief economist of The Retail Economist LLC.
“Retailers have struggled in September as consumers have pulled back on their spending.” Niemira said. “Hopefully, that restrained consumer spending power of late will help to fuel the 2015 Christmas season sales.”
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Dana Telsey, chief executive officer and chief research officer at Telsey Advisory Group, said in a separate report that September’s sales performance was varied. And the shift of Labor Day, which should have bolstered sales, did not. “We expect choppy trends from August to continue into September across retail,” she said. “While the shift to a later Labor Day weekend should have benefited the 5-week September month, we believe that warmer weather in the month could have delayed fall purchases.”
In the PwC report, the analysts described the current retail environment as “being driven by income bifurcation, demographic transitions, and evolving purchasing behaviors from technological advances. While the majority of consumers will likely spend the same or slightly more this holiday season compared to last year, the ‘survivalists’ (shoppers with household incomes less than $50,000 per year) continue to face a challenging economic environment and have indicated that they will be spending less.“
The firm said consumer preferences and “economic realities will likely make the 2015 holiday season one of the most interesting we have seen in years. This dynamic environment creates a clear opportunity for retailers to succeed or fail.”
The company’s consumer survey found that on average, shoppers will spend $1,018 this holiday season. And 52 percent of Millennials will earmark those expenditures on experiential purchases such as travel and entertainment.
Steven Barr, U.S. retail and consumer leader at PwC, said the “leading retailers are employing aggressive strategies in both the physical and digital channels to establish meaningful relationships with these segments — which is why we believe the biggest winners of all this holiday season will likely be the consumer as it is, without a doubt, a buyer’s market.”