Shoppers are changing their buying habits

If they need it, they will come – but they're spending less.

That's the shopper cadence major retail chains have seen this back-to-school season. After spending economic stimulus checks in early summer, shoppers delayed any further purchases, and sales finally picked up in the last week of August.

What does that mean for Christmas?

While the last quarter of 2007 gives stores some easy comparisons, weakening trends suggest the holiday shopping season could be another last-minute nail-biter for an industry that lives by the fourth quarter.

Three out of four consumers said the downturn in the U.S. economy has significantly or somewhat changed how they shop this year, according to TNS Retail Forward Inc.'s ShopperScape August survey.

"Signs suggest that retail spending will resume a weakening trend through the end of the year," said Frank Badillo, senior economist at TNS Retail Forward.

The International Council of Shopping Centers index of major chains rose 1.7 percent in August, below the 2 percent that had been forecast.

Excluding Wal-Mart Stores Inc.'s better-than-expected 3 percent increase, August's results are unchanged from a year ago.

Ways to save

In August, shoppers looking for ways to save boosted warehouse clubs' results and Wal-Mart's market share. Most teen specialty stores posted worse declines than expected.

Inflation lingers. Goldman Sachs analysts said in a report Thursday that they are skeptical of companies' ability to pass on increases given tepid consumer spending forecasts.

Most executives, appearing at the investment firm's annual retailing conference this week, said they can maintain margins by controlling inventories and expenses.
Retailers are, by nature, optimistic.

Zale Corp. has a new "Celebration" diamond collection for this holiday season complete with sleek new gift boxes, because chief executive Neal Goldberg says shoppers still mark special days with gifts of fine jewelry.

J.C. Penney Co. chairman and chief executive Myron "Mike" Ullman has typically used the term "appointment shopping" to describe shoppers' habits of returning to the mall en masse for key periods such as back-to-school and Mother's Day.

Lately, Mr. Ullman has expanded the definition to describe the current consumer sentiment. Business isn't bad when shoppers have a purpose.

Shorter holiday season

The days between Thanksgiving and Christmas are the industry's biggest "appointment" period, and this year it's shorter by five days, including one weekend.

In some ways that might make it better, Mr. Ullman said, because shoppers may feel the urgency to focus on their holiday shopping after the initial post-Thanksgiving rush.

Conservative spending trends are trickling up the income ranks. Neiman Marcus, Nordstrom and Saks Fifth Avenue posted weaker August sales results.

Dallas-based Neiman Marcus Inc. reported a 0.5 percent decline in August comparable sales.
Saks Inc.'s decline of 5.9 percent follows an 18.2 percent increase a year ago.

Upscale chains were holding up, but now they're reflecting higher-income shoppers pulling back, Mr. Badillo said.

"That will be part of the story the rest of this year."

SHOPPING HABITS

People are changing the way they shop, according to TNS Retail Forward's August survey:

How much has the downturn in the U.S. economy changed how you shop this year?

Significantly 33%
Somewhat 42%
Not very much 20%
Not at all 5%

How has your shopping behavior changed this year? (Asked of those who answered "significantly" or "somewhat")

Taking advantage of good sales/deals 67%
Buying only things I truly need 66%
Buying fewer things 56%
Shopping less often 54%
Doing more price comparisons before making a purchase 53%
Buying fewer luxury items 51%
Postponing purchases 47%
Using more coupons 47%
Buying less expensive versions of products 44%
Buying more store brands instead of national or high-end brands 43%
Buying only items needed in the near term 40%
Doing more shopping at discount and value retailers 37%
Using/keeping items longer before buying replacements 35%
Trading down to less-expensive brands 33%
Buying in bulk quantities 23%
Stocking up on items expected to rise in price 22%
Other/some other way 4%

Source: Dallas Morning News