Since consumers expect to pay more for clothing, retail sales seem to be getting a lift but not for the right reason.
Worthington, OH (PRWEB) June 08, 2011
A recent analysis of the ForecastIQ™ (a service from Prosper Technologies™) shows that a number of retailers may expect an increase in same store sales due to higher costs for apparel over the next 90 days, but it may not translate into increased profits. Since consumers expect to pay more for clothing, retail sales seem to be getting a lift but not for the right reason. Consumer confidence is down and consumer expectations are high when it comes to paying more for items such as fashion tops and denim jeans with 50.3% and 50.8% of American consumers expecting to pay more, respectively.
Gas prices are also affecting consumer expectations and, in turn, same store sales projections with an overwhelming 82.1% expecting to pay somewhat/significantly more at the pump. Gas price volatility may increase gas sales in the interim, but consumers are planning measures to offset the price increase such as taking fewer shopping trips (47.2%) and shopping closer to home (43.7%). Additionally, fluctuating gas prices are also having a negative impact on spending. To cope, consumers plan to spend less on groceries (24.9%) and clothing (35.2%), the highest readings since the question was first asked in May 2004. For complimentary report “Consumer Spending Expectations & Gas Price Coping Mechanisms”: http://www.formsite.com/prosper/ss060711
It appears that inflation is causing unrest among consumers and it’s uncertain how long they can sustain retailers’ increased cost of goods. But for the time being, select retailers are likely to see an increase in same stores sales over June and July of 2010.
The ForecastIQ analysis looked at a group of ten fashion retailers (specialty and high-end department stores) who report monthly same store sales. Year-over-year, most are projected to see growth through July, albeit likely from increased cotton costs passed through to the customers. Although Old Navy is forecasted almost certain growth and Banana Republic is likely, their namesake is one of the few forecasted likely to decline over the next few months compared to last year.
Almost certain to see increase:
Likely to see increase:
Likely to see decline:
Complimentary 30-day trial: http://www.forecastiq.com
The forecasts for fashion retailers aren’t the only ones to be affected by current consumer mindset. Warehouse clubs BJ’s and Costco are also almost certain to see growth through July, along with discounters Ross and TJX.
Department stores Dillard’s and JC Penney are likely to see an increase in same-store sales. Bon-Ton and Stage, however, are forecasted likely to decline.
About ForecastIQ® (Summary)
The ForecastIQ® retail model was developed by Prosper® in cooperation with Dr. Greg Allenby. The forecasts of same-store sales are based on consumer purchase intentions and behavior derived from historical same-store sales data of 23 publicly traded retailers and consensus estimates combined with BIGresearch® monthly Consumer Intentions and Actions® (CIA®) Survey data. The results provide a forecast of consumer spending 75 days in advance. Same-store sales forecasts are provided by percent growth over the next 45 and 75 day periods. Short term forecasts are available by enhanced consensus estimates.
About Prosper Technologies™
Prosper Technologies™ develops software applications that provide consumer-centric analytics to marketers/retailers for better forecasting consumer demand, allocating marketing dollars, tracking consumer behaviors and understanding cross-shopping patterns.