Economic Roundup

From Jennifer Rodrigues of Smart Reply, (July 30, 2009) a leading provider of loyalty and mobile solutions to top retailers nationwide to help media sales execs understand the economy.

I'm sure you're absolutely sick of hearing about the recession, I know I am! But it's a fact of life in the retail industry that the recession has changed the way companies are doing business, and the way consumers interact with businesses. It’s Not All Bad NewsRetailers are trying many things - discounting, promotions, huge ad campaigns – just to stay on their customers' radar and bring in new business. But things are starting to look up. The retail sector has enjoyed a sizable share of the green shoots as the economy begins to turn around - slowly. Here’s why:

May retail sales totaled $301,682,000, a 0.5% increase over April[1], showing the first month-over-month increase in nearly a year.
The S&P Retail Index, a compendium of retail sector stocks, closed June a full 26% higher than the end of February, signaling at least the markets’ optimism in the future of the industry in the early quarters of the year.
US consumer sentiment, a key metric for gauging customer’s willingness to spend on retail items, also rose from 68.7% in May to 70.8% in June[2].
· US chain store sales rose .1% for the week ending July 4. Sales also rose 1.6% for the prior weeks, marking back-to-back weekly sales growth[3].
· Discount retailers bucked the June same-store sales decline trend, with Ross Stores and TJX Cos Inc. posting same-store increases of 1.4% and 0.5% respectively[4].

Of course, in this economy, it seems that every bit of good news is followed by something bad- as if we needed a reminder that the road to recovery is filled with potholes. Last month, even Mother Nature conspired to dash our optimism, as unseasonable weather nationwide led same-store sales to slip in June (4.9% year over year[5) while consumers continued to reserve a large portion of their discretionary income for essential purchases. Department stores and apparel stores led June declines with 9.4% and 5.1% drops, respectively[6].

But despite the bad news, experts are still seeing the industry through rose-colored glasses and predicting that the recovery is on its way.

· Tomkins Associates predicts a recovery in consumer spending on inexpensive discretionary products by the end of the third quarter or the fourth quarter of this year[7]
· Capital expenditures related to the manufacture of essential consumer goods are expected to rebound by the second or third quarter of next year, according to the same Tomkins report.
· Food, cosmetics, consumer electronics, household and consumer products are expected to lead the economic recovery for the rest of the year.
· Retail and food service sales are expected to rise through July and August, exceeding $347 million, according to the Financial Forecast Center[8].

Positive Mental Outlook
So the recovery is out there, and those retailers that are engaged in proactive recovery planning will be in the best position to capitalize on an economic comeback. What kind of proactive recovery? Savvy retailers continue to explore innovative marketing strategies and cost-effective initiatives to stay both on valuable consumers’ radar and well-positioned to grow aggressively once the economy turns the corner for good.