July 11 - Overall June retail sales results have come in ahead of forecasts, but digging deeper they tell the story of a customer base that's strongly diverging. Jeanne Yurman reports.
Consumers still have a steady pulse and though it's fragile, it was still enough to drive better than forecast chain store sales in June. Surging stock prices, higher home values and a slowly improving jobs market continues to provide a boost to spending. But last month's results show the divide between who's shopping and for what continues to grow. Higher prices for things like milk, fuel and health care is impacting a majority of consumers says WSL Strategic Retail's Candace Corlett. CANDACE CORLETT, PRESIDENT, WSL STRATEGIC RETAIL SAYING (English): "They're cutting into their discretionary income so when it comes time for the middle class and the lower income shopper to go head to the store and buy things for them, special treats, that's where they put the breaks on." That's reflected in the June data. Costco - where shoppers can afford to dish out in advance for bulk purchases - posted strong numbers. Specialty retailers, which draw a broader range of customers - like the Limited - fell short. Still Corlett says retailers are doing a good job adjusting to the hyper cautious customer. CANDACE CORLETT, PRESIDENT, WSL STRATEGIC RETAIL SAYING (English): "They've recognized that they have to manage their inventories very well. They have to be cautious on bold fashion statements. They don't have a consumer who aspires up so much anymore. They have a consumer who wants to be safe." The one area Corlett says gets a break from consumers' tight fistedness is spending on kids for school. Parents ease up to make sure their kids have all the right gear. This is something retailers are counting on in the next couple months with the back-to-school period ranking second only to the December holiday season.