Spring Weather Brings Out Shoppers

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Shoppers at Target in New York City i

Target says its sales in March were 10.3 percent higher than a year earlier. Andrew H. Walker/Getty Images for Target hide caption

itoggle caption Andrew H. Walker/Getty Images for Target
Shoppers at Target in New York City

Target says its sales in March were 10.3 percent higher than a year earlier.

Andrew H. Walker/Getty Images for Target

On a blindingly sunny day, shopper Pamela Vestal emerged from an Urban Outfitters outlet in downtown Washington, D.C., wearing big sunglasses — with the sticker still on them.

In addition to the shades, Vestal bought a purse, a wallet and some shoes, spending a total of about $100 on items she wouldn't have bought last year. "Especially this bag — $48 — I would have gone to Walmart or some place cheaper," she says.

Over the past year, Vestal says she has spent less on food, and also let her wardrobe get stale. Now she's loosening up. "I just recently started buying stuff for spring; you know, I didn't buy a lot during the winter."

Now she's even shopping for a house.

Consumer spending, which drives nearly three-quarters of the U.S. economy, declined sharply during the recession. Manufacturers cut production, and retailers put less stuff on shelves and fewer workers on the floor.

A 9 percent year-over-year sales surge at major chain stores in March has economists wondering whether consumer spending is up long term, or whether it's just the nicer weather.

Can The Good Times Last?

Retail sales at many large chain stores rose sharply in March from a year earlier. Economists are wondering if the trend will continue.

Graph: Monthly sales growth (excluding Wal-Mart), March 2009 to March 2010.

Notes

Sales increases over prior year

"March is usually a tricky month to read, anyway," says Marshal Cohen, an analyst for the retail industry research firm NPD Group.

Cohen says last month's rise in retail sales may simply represent pent-up need. People can only wear torn clothes and use broken toasters for so long before replacing them.

Also, Easter came early this year, so all the spending on bunnies and pastel eggs may have boosted the numbers as well.

But, Cohen says, perhaps consumers have had enough of penny pinching. "A lot of frugal fatigue has set in. People are saying, 'I'm tired of not spending and living on a budget,' " he says.

Sandy Kennedy has been resisting indulgences but recently went on a spring fling with her credit card.

"I'm a purse and shoe person, so I've had fun this spring," says Kennedy, who is president of the Retail Industry Leaders Association.

Kennedy also says sellers are starting to stock more goods, and previously delayed store openings are getting back on track. She notes the return of "lifestyle" brands — lines of goods that have fashionable flair — at places like Target and JC Penney.

But Kennedy says some things won't come back, like a certain amount of inefficiency and waste. During the downturn retailers made themselves leaner. They now use software to schedule extra employees during peak shopping times. They're using text message discounts instead of paper coupons. And they're putting things in smaller, sleeker packages.

Still, with unemployment still high, many consumers remain cautious.

After losing his job last year, David Muldoon just found a new one, but he's still not ready to splurge. "I literally just got a job offer last week, so I don't think it will have an effect on my spending habits for quite a while," he says.

But, while at shopping center in Montclair, N.J., he did buy a bottle of wine, because his wife just got a job offer as well.

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