January retail sales dip; low-income shoppers changing retail game

Sales reported by national retailers on Thursday lend credence to a report that market share gains for retailers will come from catering to lower-income shoppers.

Retail Metrics reported Thursday (Feb. 5) that comparable-store sales nationwide dropped 1.8% in January. The decline was better than the 2.3% dip expected by market watchers, but still follows a December decline of 0.9% and a 1.8% November dip. (See list of January sales reports from stores active in the Fort Smith area at the end of this post.)

Bentonville-based Wal-Mart Stores Inc., however, posted a 2.1% increase in January same-store — stores open at least a year. And how big is Wal-Mart? That 1.8% nationwide decline would have been a 5.6% decline without Wal-Mart sales factored in.

Also, the International Council of Shopping Centers noted in its retail report that January same-store sales dipped 1.6%, with the ICSC predicting that February sales will dip as much as 2%

Falling home sales and prices, the worst unemployment situation in 16 years and consumer concerns about future economic woes are cited as key reasons for the three-month sales slump.

THE LOW-INCOME CONSUMER
Chicago-based IRI Insights issued a research report Thursday suggesting that low-income and cash-strapped consumers “represent an enormous opportunity for retailers and manufacturers during the slow economy.” IRI provides research for about 95 percent of the global Fortune 500 consumer packaged goods companies.

Further, IRI estimates the low-income group will increase its spending on consumer packaged goods (CPG) by as much as $84 billion during the next decade.

“Lower-income households are one of the hottest opportunities in the marketplace and will provide real growth for those who want to truly learn about the various micro-segments and their changing behaviors due to the economy,” IRI Consulting and Innovation President Thom Blischok noted in a statement.

The lower-income shoppers are not a “homogenous group,” according to IRI, and have different spending patterns within five distinct groups. Those groups are: Singles and married couples aged 25-34; seniors older than 65; households with children, Hispanics; and African Americans.

“At this point in history, the lower-income shopper is continuously challenged to stretch each and every one of their dollars, which will continue for at least the next four-to-eight years,” Blischok said.

Other retail tidbits from the IRI report include:
• CPG spending and private label sales improved during the third quarter of 2008.

• Budget-constrained, lower-income shoppers are shopping more frequently, but are spending less per trip.

• African American and older household spending has increased notably in salty snacks and chocolate candy.

• Hispanics have increased their spending on frozen dinners and cereals.

RETAIL SALES REPORTS
Wal-Mart Stores
January 2009: $17.9 billion
January 2008: $16.9 billion

Target
January 2009: $4.14 billion
January 2008: $4.11 billion

Dillard’s
January 2009: $377 million
January 2008: $435 million

J.C. Penney
January 2009: $983 million
January 2008: $1.16 billion

Kohl’s
January 2009: $720 million
January 2008: $791 million

TJX (TJ Maxx)
January 2009: $1 billion
January 2008: $1.1 billion