Gloomy economy changing shoppers' habits

‘Control of the little things’
The widening gap between discounters and mall-based apparel sellers was evident in monthly retail sales figures released last week. The International Council of Shopping Centers-UBS tally of 38 stores found that same-store sales at discounters rose 5.1 percent in June and 9 percent at wholesale clubs. Discount giant Wal-Mart Stores Inc. posted a robust 5.8 percent, its best June performance since 2002.

At department stores, though, same-store sales — or those at stores opened at least a year — dropped 4.1 percent.

“People are spending money on food and the products they need to sustain life,” said Todd Hale, senior vice president at Nielsen.

He noted sharp declines in visits to clothing, office supply and hardware stores. He also pointed out that sales of store-brand products in grocery items are up 9.1 percent for the year ended April 19, while sales of branded products rose a more modest 3.9 percent. More than half the sales growth from store label grocery items is now from dairy products such as milk and cheese, an area that has seen soaring inflation.

Liebmann says Americans are trying to take “control of the little things” like mending socks or buying more store-brand food because they can’t control the big things like gas and food prices.

Wooing consumers
Their little changes, though, are forcing some companies to respond in big ways.

Auto executives predict that consumers’ newfound appreciation for smaller cars will be permanent, causing major pain at auto plants. Toyota Motor Corp. was among the latest to announce a product overhaul, saying it will shut down truck and SUV production to meet the changing consumer needs.

Pizzini, 29, of Eagleville, Pa., says his elderly Acura gets almost three times as many miles per gallon as the Escalade, whose lease he got out of through a company called LeaseTrader.com. Since last October, LeaseTrader.com has seen a 24 percent increase in the number of people who want to downsize to a smaller car, spokesman John Sternal said.

Fred Clements, executive director of the National Bicycle Dealers’ Association, said consumers stung by $4-per-gallon gas are shifting toward utility bikes and away from recreational versions. That’s forcing bike shops to change their inventories and offer more training for consumers who may not have ridden a bike in years, he said.

Plenty of stores that have benefited from shoppers’ woes are hoping to retain them when the economy rebounds.

Andrea Thomas, executive vice president of private brands at Wal-Mart, thinks that many shoppers will stick with store labels since the quality has improved so much. Overall, Wal-Mart expects to retain the affluent customers when the economy recovers because it has made improvements in its stores and customer service.

Edwards, of Wentworth Hauser and Violich, agrees that new fans of discounters will keep buying at discounters as long the products measure up. And she sees lower-income shoppers switching back to meat from beans and rice before going back to name-brand food.

At the Alexandria Shoe Repair and Leather Service in Virginia, sales have increased 18 percent since February.

“I am seeing a younger crowd who lives in the disposable world,” said owner Barbara Steube. “They are learning an economics lesson. They will see the benefit of the savings and how much money they walk away with when they fix their shoes.”

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