The past week’s macroeconomic indicators suggest that retail sales trends are mixed.  Price effects and a more uncertain economic environment are weighing on sales.  A letup in inflation, including gasoline prices, is hurting nominal sales growth, but it may be keeping shoppers’ spending intentions resilient despite weaker job and income growth and a flagging stock market.  Record-low interest rates may be cushioning the economy from these negative factors.  Initial unemployment claims—a leading indicator of job growth—dropped in the past week, but a more sustained trend is needed to indicate job growth is reaccelerating. 

See below for highlights from the latest data released over the past week: 

• Same-store retail sales growth slowed in June at most reporting retailers, including Costco and Target.  TJX , Ross Stores and upscale department stores were among the few to post solid growth.  Walgreen and Rite Aid posted steeper declines, partly due to price effects. 
• Shoppers’ spending intentions moved higher in June for the fourth-straight month according to results from the Kantar Retail ShopperScape^® survey. 
• Disposable income growth compared with a year ago remained modest in May, staying at almost a two-year low.  Tougher comparisons to a year ago, when the payroll tax cut was introduced, and slower job gains have dampened income growth.
• Retail gasoline prices (non-seasonally adjusted) in the past week fell to a six-month low.
• Mortgage applications for June indicate that home sales are likely to stay on a similar or stronger pace.  Also, refinance applications surged due to record-low interest rates and new programs to reduce costs and expand access to some homeowners, including those with negative equity.  If approved, refinancing would help these homeowners free up cash.  

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One shopper that has been important to watch throughout the recession and the initial phases of recovery is "mom." Analysis of her trading up and trading down/out priorities suggests that she is making some savvy trade-offs in order to treat herself and her family and still maintain a household budget. For most of the categories where mom is more likely than average to say she is trading down or trading out, there is a corresponding category in which she is more likely to be trading up.

Categories in Which Moms are More Likely Than Average to be Trading Up or Trading Down/Out

Source: Kantar Retail ShopperScape®, April 2012

With Kantar Retail's Shopper Insights, you get an in-depth view of shopping behavior, and can use this information to build a holistic view for your key customers and your business. For more details, on our Shopper Insights programs, contact us at customerservice@kantarretailiq.com or alternately, view our product brochure.