The way middle-class consumers are spending their money is hurting some retailers.
While lower gas prices mean Americans theoretically have more disposable income, they aren’t choosing to spend it at retailers like Wal-Mart, Target, and Macy’s, industry expert Robin Lewis writes on his blog.
Macy’s CFO Karen Hoguet told analysts that consumers today have priorities other than clothing and housewares.
“Shoppers are spending more of their disposable dollars on categories we don’t sell, like cars, healthcare, electronics and home improvement,” Hoguet said in a call with investors last week.
Lewis says that this could spell trouble for many retailers this holiday season. Macy’s and Target have both reported disappointing sales recently.
He believes that although Wal-Mart recently reported a slight increase in sales, long-term trends aren’t promising for business.
“Walmart is clawing back its customers whom they lost to the thousands of smaller neighbourhood dollar stores during the recession when gas prices were high and low-income shoppers had a shorter ride to those local stores, thus saving fuel costs,” Lewis writes.
It’s also possible that Americans have come to expect promotions on items like clothing, and would rather invest in other categories.
“With coupons, discounts, loyalty points and gifts-with-purchase more the rule than the exception today, consumers are spending less because they can,” Lewis writes.
Consumers’ newfound obsession with home improvement is helping business at Lowe’s.
CEO Robert Niblock told Bloomberg that desire for Americans to invest in their homes is at the highest level since 2006.
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