Bright fashions that retailers are pushing are out of sync with anxious consumers.
NEW YORK — The nation’s stores are awash with orange patent-leather sandals and coral printed dresses, but gray or black would be a better match to shoppers’ moods these days.
“The climate out there is frightening,” said Judith Lederman, a public-relations executive who was laid off from Lord & Taylor three weeks ago. The Scarsdale, N.Y., resident says she’ll bypass the mall and dig into her closet for her spring wardrobe.
The spring season was already expected to be tough for retailers, particularly apparel merchants.
An early Easter — this Sunday’s is the earliest since 1913 — historically doesn’t help sales of lightweight clothing, and deteriorating economic conditions have made shoppers even more nervous in recent weeks.
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Consumers already worried about rising prices, weak jobs and housing markets and tight credit got another jolt on Monday with the near collapse of investment firm Bear Stearns, a major casualty of the mortgage crisis.
“As you pile on uncertainty, there is a greater burden on consumers,” said Lynn Franco, director of The Conference Board’s Consumer Research Center.
The Conference Board is scheduled to report next week that its consumer-sentiment index will remain at a 17-year low of 75 in March, after tumbling 12 points in February. That’s the lowest level since the index registered 64.8 in February 2003, just before the U.S. invaded Iraq. The index has been on a decline since it registered 111.9 last July.
That’s bad news for retailers and the U.S. economy, which need consumers to be in a good mood. Consumer spending accounts for two-thirds of economic activity.
Michael Niemira, chief economist at the International Council of Shopping Centers, is sticking with his March same-stores sales-growth forecast of only 1 percent for the 50 merchants he tracks, after a 1.9 percent gain in February. Same-store sales, or sales at stores opened at least a year, are considered a key indicator of a retailer’s health.
“It is a tough month. It probably doesn’t get much better,” Niemira said.
He noted that soaring gasoline prices, in particular, are squeezing customers from all income groups. According to a survey conducted by ICSC earlier this month, 64 percent of about 1,000 customers polled said that higher gasoline prices were curbing their ability and willingness to spend, with 38 percent noting “a considerable cutback.”
There is little relief in sight. Gas is averaging $3.28 a gallon and is expected to peak between $3.50 and $4 this spring. Also, Niemira and others are worried that consumers will use the tax-rebate checks being mailed out in May to pay down debt, not to spend and spur the economy, as the government hopes.
Meanwhile, national retailers are closely following the developments on Wall Street.
The near failure of Bear Stearns “presents a scare tactic for the rest of the country,” said Faith Hope Consolo, chairman of Prudential Douglas Elliman’s retail leasing sales division.
Financial security shaken
Betsy Storm, from Chicago, said that her confidence in her own financial security was shaken after hearing the news about Bear Stearns. The self-employed marketing professional said the latest news served as a reminder to remain frugal. In recent months, Storm has been shopping more at outlet stores.
“Whatever we do will be far more trimmed down,” she said.
Apparel merchants across the country have been among the hardest hit as consumers view buying clothing as discretionary spending. Stores hoped that spring’s brightly colored clothing and bold geometric prints — a dramatic difference from neutral tones and beiges of a year ago — would help entice customers, but shoppers aren’t enthusiastic so far.
Stefani Greenfield, owner and creative director of Scoop NYC, a 15-store chain that sells trendy fashions in such locations as Dallas and Miami, said bad weather has cut the impulse to buy bold printed spring dresses but acknowledged that the economic climate is making shoppers frugal.
The good news is that merchants have leaner inventories. Still, stores are courting customers with private sales and big discounts. Macy’s has brushed up its spring campaign with two new ads and its first celebrity ad in Spanish.
Doneger’s creative director David Wolfe thinks the arrival of warmer weather will help spur sales of colorful merchandise and the bright hues should offer customers an escape from the bad economic news. But to Wolfe’s dismay, fashion designers are showing black and other dark colors on the runways for fall.
“They’re shooting themselves in the foot,” he said.