Aug 9, 2007

Shoppers playing it safe for summerBy Lou HirshPE.com

New York – The sluggish sales that have dogged the nation’s retailers this year are the result of two quite different sets of problems: Consumers are cautious — they’re paying more for gasoline and watching their home values fall. And, the stores just don’t seem to have the merchandise that people want to buy.

As retailers reported generally disappointing July sales results Thursday, it was clear that the weakening housing market and more expensive gas had shoppers limiting their trips to the mall and, when they did go, buying tentatively, following a pattern that began back in February.

But analysts say stores can’t blame all their problems on macro-economic conditions. Even teen retailers like Pacific Sunwear of California Inc. and Wet Seal Inc., which tend to be least vulnerable to the whims of the economy, had a bad month. That suggests to analysts that stores are not serving up the most exciting products.

“There is a big middle that is treading water, trying to figure out what their consumers are looking for,” said Trish Walker, partner in the retail practice at the consulting firm Accenture.

John Morris, managing director of Wachovia Securities agreed, noting that consumers may not have an urge to go to the mall since “a lot of fall trends are extensions of what worked in the spring and summer.” They include khaki shorts and baby doll tops in heavier fabrics.

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