Last month sales at general retail stores rose 1.6%, the lowest
rate of growth in October in 12 years, according to the International
Council of Shopping Centers. Today's New York Times commented: "Consumers have rendered a verdict on the coming holiday season: grim."
Among the factors, of course, are the subprime mortgage crisis, credit
problems, high energy costs and most important consumer concern about
the economy. Anecdotal evidence is mounting that many consumers will
tighten their spending this holiday. Already some general retail
chains, which have lowered holiday sales estimates, are reacting with
sales and plan to discount heavily later in the month and December.
Comp-store sales in October in most categories dropped. The exceptions
were luxury retailers Saks and Neiman Marcus, up 10.6% and 8.5%
respectively, and Costco, up 7%. Saks's results were aided in part by
the weak dollar. The Wall Street Journal said that foreign
tourists "mobbed" its flagship store in New York City. That store
accounted for 20% of Saks's revenue last year.
Bill Dreher of Deutsche Bank Securities noted the trend of "trading
down," saying, "Nordstrom customers are trading down to Macy's, and the
Macy's customer is trading down to Target."