Stalled consumer spending provides retailers more pain

NEW YORK — Shoppers at Randal Weeks’ home decor have started being more tentative about buying the pillows, furniture and framed prints they admire in the store. They even shy away from small, inexpensive items like candles.

“We are seeing much less impulse buying and hearing more ‘I need to go home and think about it,’” says Weeks, owner of Gray Living, located in the Dallas suburb of McKinney, Texas. Customers’ reluctance to spend has sent Weeks’ sales down 12 percent so far this year from the same period of 2015. The problem goes beyond the Dallas area — Weeks has a wholesale business, supplying merchandise to other retailers around the country; they report their customers are hesitant, too.

The Commerce Department’s monthly report on consumer spending shows the trend: Spending crept up just 0.1 percent in December, January and February, falling from an average monthly increase of nearly 0.4 percent the preceding nine months. Retailers of all sizes are feeling the impact — for example, Gap Inc. said a key measure of its sales fell 2 percent in February. But small and independent retailers that don’t have the financial cushions the big players do are more vulnerable when consumers get cautious and revenue falls.

Shoppers feel uncertain because of a stock market that fell more than 10 percent in six weeks, says Bob Phibbs, CEO of The Retail Doctor, a consulting company based in Coxsackie, N.Y. And Gray Living’s Weeks says a few of his customers have said they’re uneasy because of the presidential election; they don’t have a sense of how it will turn out. The pace of consumer spending so far this year is sharply lower than the 3.4 percent for all of the last presidential election year, 2012, as well as the election years before the recession, when spending rose about 6 percent or more.

Shopping doesn’t have the appeal for many people that it did before the recession, especially since consumers have become more conservative about running up credit card bills, Phibbs says: “Retailers love to think there’s going to be this great catch-up moment, when we’re all going to go back. The reality is, this is the new normal.”