Deliver Your News to the World

National consumer survey points to tough holiday sledding for retailers, says RBC Capital Markets


A national survey of consumer spending habits indicates that a plunge in consumer confidence may mean tough sledding ahead for retail companies as the peak holiday spending season approaches. The sharp drop in consumer sentiment is reflected in a retail and restaurant sector survey being released in conjunction with the RBC Capital Markets Annual Consumer Conference, being held this week in Naples, Florida.

The survey findings across four retail sectors - hardlines, softlines, restaurants, and leisure products - correlate with the latest RBC CASH (Consumer Attitudes and Spending by Household) Index, a monthly nationwide sample of 1,000 U.S. households. Consumer confidence declined significantly this month as the CASH Index dropped to 71.1 in September from 89.3 in August, with Baby Boomers the least optimistic group across all four indices - current conditions, expectations, investment, and jobs.

“The RBC CASH Index is an excellent macro-economic barometer of retail sales and spending trends, and all signs from that and our more micro-oriented retail sector survey point to a slowdown in consumer spending that could affect the coming holiday season,” said RBC Capital Markets equity analyst Larry Miller. “Particularly with Boomers, traditional drivers of economic growth, being so pessimistic about the immediate economic future. However, while the survey results do not point to a strong holiday season, they also do not suggest an impending disaster, and there are a few bright spots.”

For example, according to the RBC Capital Markets Consumer Conference survey, despite the sour mood, four in five women surveyed (82 per cent) said that they have shopped for (and purchased) either a similar amount or more clothing in mall-based apparel stores this year than they did last year. Nearly six in 10 regular women shoppers plan to spend more or the same on apparel during this holiday season as compared to last year, and almost half of the women who did not shop last season plan to shop this year. The results provide some encouragement for apparel retailers, including department and specialty stores, looking ahead to the holiday season.

Overall, delay is a common theme for consumers. Nearly 80 per cent of consumers plan to purchase a recreational vehicle in the future, including motor homes, boats, motorcycles and all-terrain vehicles. However, pent-up demand for these big-ticket items is unlikely to be satisfied in the near future, as the majority of consumers say that it will be more than a few years until they make such a purchase.

Near-term purchase intentions in consumer electronics are also relatively weak. Just seven per cent of respondents indicated that they intend to make their next significant consumer electronic purchase ($500 and up) in the next three months. More than half of consumers (51 per cent) plan to hold off more than a year in making their next purchase of a consumer electronics item over $500.

Consumer electronics specialty stores such as Best Buy, Circuit City and Radio Shack are the destination of choice for those with the highest propensity to purchase new products such as a flat-screen TV, MP3 player or video game system, with 45 per cent visiting these stores and another 11 per cent visiting their Web sites. Mass channel retailers such as Wal-Mart and Costco were the first choice of only 28 per cent of prospective buyers, showing the strong hold that specialty retailers continue to have on consumers -- specifically on desirable higher-income consumers.

The restaurant industry, a key indicator of present and future discretionary consumer spending, is experiencing a continuation of the rough patch it has faced in recent months. Four in 10 consumers (39 per cent) say they are eating out at restaurants less often than they did six months ago. Of those who continued to eat in restaurants, 40 per cent say they are less willing to order higher-priced entrées, appetizers and desserts. Also troublesome for the industry is that a majority of Americans (54 per cent) say they plan to eat out less frequently in the coming months.

“After a summer of worrisome economic news, consumers are increasingly concerned about their prospects, and this is affecting their willingness to make major purchases,” said Marc Harris, RBC Capital Markets’ Director of U.S. Equity Research. “While the signs are pointing negative, there are some bright spots in retailing, and a spate of good news this fall could raise shoppers’ spirits in time for the holiday season.”

The RBC Capital Markets consumer survey is based on a representative nationwide sample of 1,001 U.S. adults polled by survey-based research company Ipsos Public Affairs. The margin of error was plus or minus 3.1 per cent.

About RBC Capital Markets
RBC Capital Markets is the corporate and investment banking arm of RBC and is active globally in debt origination, sales and trading, foreign exchange, infrastructure finance, structured products, metals and mining, and energy. Its North American platform includes leading equity, underwriting, sales, trading and research businesses and a significant U.S. middle market investment banking franchise. Bloomberg ranks the firm as one of the Top 20 investment banks globally.


This news content was configured by WebWire editorial staff. Linking is permitted.

News Release Distribution and Press Release Distribution Services Provided by WebWire.