The NPD Group says that teen spending is up 6-8% over last year. And, they’re buying what’s typical: fashion, lifestyle, electronics. I want to believe it, but I still don’t like what I’m seeing, reading and hearing about Back-to-School and the Fall 2010 retail season. Although the Discount/Variety store sector continues to have busy stores and monthly positive trends, there is much hand-wringing in the specialty and department stores.
The BTS period is highly compressed but is a harbinger for the Fall and Holiday seasons. With 09 comps so challenged as a benchmark but most having improved performance in 1st and 2nd quarters this year, many retailers bought product aggressively. And, of course, orders have already been placed for the balance of the year. Not surprisingly, we’re seeing pre-season promotions well before prior years. Check out the Washington Post article about Target, Toys R Us and Sears “Black Friday” sales.
This economy has consumers very nervous and anxious. What we’re getting is pretty much what we were promised by the Fed a year ago. Now that the movie has been playing for over two years, the lead actors would still be named, ‘Erratic’ and ‘Volatile’. ‘Unpredictable’, at least, doesn’t need top billing. Even last week, Paul Volcker, economic adviser to President Obama, gave his own unvarnished version: “This is not a bounce back. We are suffering from some very large, undermining problems.” (Note that he didn’t say ‘underlying’ which is way too vague.)
US State Budget Shortfalls - Click to Enlarge
Consumer confidence, housing starts are disappointing, but the oil spill and, now, Bush’s tax cuts and more state money-grubbing is grabbing the home and front pages. Anderson Cooper from CNN is still working the back stories, but economy news stories like these are a drag on people’s perceptions and, no doubt, trickle back into buying behavior.
Clever promotions are helping to woo parents and kids to open their wallets, but they’re shopping like the predictions said earlier in the year that consumption would be of the necessity variety, with an occasional sprinkling in of a special or luxury item. Hot teen brands like Abercrombie, Aeropostale, J Crew, Juicy, Delias, Urban Outfitters, Wet Seal and others will release their July numbers soon, so we’ll have a good look inside then.
Regardless of the tea leaves and what actually happens, consumers will remain reluctant spenders. Intriguing, fresh and new products matched with the right touch of incentives and promotions need intense focus. And, I think we need accelerated thinking right…about…now.