Still-wary shoppers start to loosen up

By Anne D’innocenzio

Associated Press

October’s retail sales results, the best since April 2008, show that Americans are spending a little more. But will they be willing to pay full price this holiday season?

Stores are heading into the period with slashed inventories, determined not to have fire sales like last Christmas. But shoppers are facing tight credit and a weak job market and might wait for discounts or not buy at all.

“Shoppers are still being cautious, but we are seeing some signs of recovery in the economy,” said Carl Steidtmann, an economist at Deloitte Research, who forecasts holiday sales will be unchanged from a year ago.

Sales at stores open at least a year rose 2.1 percent in October, according to the International Council of Shopping Centers-Goldman Sachs tally, compared with a 4.2 percent drop in October 2008. The October results beat estimates for a 1 percent gain and followed a 0.6 percent increase in September.

Sales at stores open at least a year are considered a key indicator of a retailer’s health.

For the holidays, more consumers will be paying full price and shopping earlier than a year ago because they are afraid the merchandise they want won’t be there later, Steidtmann believes. But he also noted that while reduced stock will help boost store profits, it will likely limit sales as merchants run out of products.

Others like Ken Perkins, president of retail research firm Retail Metrics, say it’s going to be hard to get shoppers to pay full price unless they want the item badly.

The sales results showed that shoppers still were not splurging, restrained by worries about the economy. But the improving figures point to sales momentum, encouraging as the holiday shopping season approaches.

Affluent shoppers, who had been tight with their purse strings since the financial meltdown last year, spent more for designer duds, delivering solid gains for Saks and Nordstrom.

Other bright spots were Costco; TJX Cos., which operates T.J. Maxx and Marshalls; and Gap. But sales at most teen merchants were weak.

The figures exclude Wal-Mart, the world’s largest retailer, which stopped issuing monthly sales reports earlier this year.

Business was helped by a number of factors. Cooler weather helped boost sales of plaid shirts, leggings and boots. And early holiday discounts also may have drawn shoppers to get a head start on Christmas buying.