The pace of shopping has slowed down as shoppers remain wary with weak wage growth and economic uncertainty despite the impending holiday season.
Growth is stalling at major department stores such as Macy’s, Nordstrom’s and Dillard’s, whose sales all declined in the third quarter along with the value of their stocks. The slump in sales is a reflection that consumers are not flush with extra money as food and healthcare costs continue to rise.
“The middle class and lower middle class have not yet felt a significant benefit of economic recovery,” said Steven Barr, the head of U.S. retail and consumer for PwC, the New York-based tax and advisory services company. “Despite some positive indicators such as the decline in unemployment and small increases in wages, the consumer still is extremely cautious.”
Workers are also concerned about the future of their jobs and are reacting more cautiously this year, said Vince Gauci, president of VFG Associates, an insurance and professional services agency in Livonia, Mich.
“Consumers have a tendency to think that their jobs are not stable in these current economic conditions, which means that they are saving more for the possibility of the loss of their job,” he said. “Consumers and investors alike seem to be keeping more money in a cash position in the event of an emergency versus spending it.”
Department stores are facing tough competition from specialty stores such as Uniqlo, H&M Hennes & Mauritz and Zara-owner Inditex, whose brands have risen in popularity.
Instead of shopping at department stores and malls, the data indicate consumers are spending their money at discount stores and home improvement companies, said Jonathan Eyl, lead consumer analyst at Nasdaq Advisory Services, a New York-based shareholder and securities analysis.
“These companies have continued to see positive foot traffic in their stores, while department stores and mall-based retailers have not seen attractive numbers yet,” he said. “The holiday season is right around the corner and these metrics can shift very quickly post Thanksgiving.”
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