Squeezed shoppers seek cheaper stores

first_imgThe idea of trading down is different from cross-shopping, when shoppers buy kitchenware at Target and status handbags at Neiman Marcus. Shoppers cross shop to have a more eclectic style, but trade down to cheaper stores as a sign of financial stress, experts say. Amanda Curry, a waitress and bar manager from Riverview, Mich., said she normally shops at Somerset, an upscale mall with Nordstrom and Macy’s department stores. Now, she is looking at places that offer lower prices. This year’s destination? “Meijer, Wal-Mart – J.C. Penney, probably,” she said. “My income’s not as high as it used to be,” she said, noting she now has a 17-month-old daughter. Monica Tang, a retail strategist at Kurt Salmon Associates, agrees that certain shoppers are trading down to less expensive stores, but she doesn’t see it as a slam on the brakes. They are finding easier ways to cut back if they are looking to reduce their spending, she said. The trend is starting to play in the hands of Wal-Mart Stores Inc., which has stepped up discounting after suffering its worst holiday season on record last year. Last week, the discounter recorded an 8 percent profit increase, and analysts say it could benefit from shoppers trading down this holiday season even as its core customers pull back. NEW YORK – That $3.20 latte at Starbucks or the $300 handbag at Coach may no longer be affordable luxuries. Feeling squeezed by gas prices and weak credit, the nation’s shoppers are increasingly trading down to lower-price stores or cheaper items. Such changes – which emerged this past summer and surfaced in the latest financial results for retailers – could alter dynamics of the holiday shopping season as it officially kicks off today. For some shoppers, it could be as drastic as buying all their clothes at discounters instead of department stores. For others, it could be as subtle as buying a wallet instead of a handbag or one latte per week at a fancy coffee shop and deli coffee on the other days. The trend could benefit discounters, warehouse clubs and drug stores while hurting department stores and mall-based apparel chains. Even Starbucks Inc. reported its first decline in traffic on record at its U.S. stores. “People are so cash- and credit-concerned,” retail consultant Burt Flickinger III said, noting he hasn’t seen “the trading down” phenomenon since the 1987 stock market crash resulted in massive job losses and the housing slump in the early 1990s. Drug store chains such as CVS Caremark Corp. and Walgreen Co. – both of which have been adding trendy items such as funky jewelry – are expected to be winners. Meanwhile, department stores – which enjoyed a resurgence last holiday season – have seen their fortunes reverse. Home and apparel, categories sensitive to the economy, are struggling with sluggish sales, and department stores are finding stiffer competition from the likes of offprice stores such as TJ Maxx, Flickinger said. Luxury stores such as Saks Fifth Avenue should continue to fare well this holiday season. But the aspirational luxury buyer seems to be feeling pinched, hurting results at Coach Inc., considered a bellwether for the low-end luxury market.160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!last_img

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