July Same-store Sales Sag Slightly

Retail same-store sales excluding Walmart sagged slightly to a 2.9 percent gain in July, hurt by a tough promotional environment and the diverging spending intentions of shoppers by income group.

The sales-weighted composite for the 31 retailers reporting — most of them apparel retailers — was slightly lower than the 3.2 percent same-store sales gain last month, according to Kantar Retail. July was much better, however, than the 4.6 percent decline in July 2009 for the same measure calculated without Walmart, which stopped reporting monthly results in April 2009.

“Retail sales growth appears to be leveling off at a modest pace as it moderates from a spring surge fed by economic stimulus and pent-up demand. But the results are uneven among retailers, which reflects tough price competition in certain channels and diverging spending intentions among upper- and lower-income shoppers,” said Kantar Retail senior economist Frank Badillo.

The results were led by stronger-than-average results at department stores. Apparel and accessory stores reported combined results close to the composite. Lagging slightly were food, drug and mass retailers.

July’s mixed results among channels and retailers partly reflect shoppers’ spending intentions, which stabilized among upper-income households while weakening among low- to mid-income households, according to the July ShopperScape survey by Kantar Retail.

The spending intentions of upper-income households appear to be most sensitive to various measures of their household financial health. Their spending intentions sagged in June in the wake of stock market declines, and then stabilized in July as job prospects and other financial conditions improved.

The spending intentions of mid-market shoppers continued to deteriorate slightly. The percentage of shoppers that intend to spend less in the coming month edged higher for a second straight month after improving steadily over the prior year. Meanwhile, the spending intentions of down-market shoppers deteriorated slightly in July for the first time since March.

The differences in July spending intentions by income group may be partly explained by households’ perceptions of their job and income prospects, which worsened significantly for down-market households and improved for up-market households in July.

In terms of down-market shoppers, 32 percent said they felt worse off in July in terms of job security and 41 percent in terms of income levels. That represented increases of five percentage points and four percentage points, respectively, from the prior month.

In terms of mid-market shoppers, 30 percent said they felt worse off in July in terms of income levels. That was an increase of two percentage points from the prior month. The job security measure stayed constant.

In terms of up-market shoppers, 15 percent said they felt worse off in July in terms of job security. That was a decrease of two percentage points from the prior month. The income measure stayed constant.

For a list of the retailers reporting and their results, visit www.retailforward.com/retailintel/samestr_sales.pdf

Cambridge, Mass.-based Kantar Retail (www.kantarretail.com) is a global retail insights and consulting business that works with leading retailers and branded manufacturers to transform the purchase behavior of consumers, shoppers and retailers. The ShopperScape survey is conducted online each month with a sample of 4,000 U.S. primary household shoppers.