Retail Sales Record Sharp Fall
Retail sales fell sharply in October. It was the fourth straight month in which overall retail activity declined. The October decline of 2.8 percent looks worse than it actually is, however. Take out gas prices, which are declining, and retail sales decline 1.5 percent.
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ROBERT SIEGEL, host:
Well, here in the U.S., retailers are feeling the pressures. Sales fell nearly 3 percent in October, according to numbers released today by the Commerce Department. Sales have fallen for four consecutive months, and that has not happened since the government began tracking them in 1992. As NPR's Wendy Kaufman reports, stores and shops are looking ahead to a meager holiday season.
WENDY KAUFMAN: The numbers aren't pretty, but when you strip away the roughly 13-percent drop in gasoline sales due largely to lower prices, the overall retail figures don't look quite as bad. Excluding gasoline, retail sales were off 1.5 percent. In a different economy, savings at the pump might have translated to higher sales elsewhere. But not this year.
Mr. SCOTT KRUGMAN (Vice President, Public Relations, National Retail Federation): Clearly, consumers are still hibernating. They're scared, and they're worried about the financial markets.
KAUFMAN: Scott Krugman is vice president of the National Retail Federation.
Mr. KRUGMAN: Each day, consumers are seeing home values continue to drop. They're hearing that banks are tightening credit, raising interest rates on credit cards. They're hearing about record unemployment, and because of that, they've been holding back on spending.
KAUFMAN: Auto sales fell more than 5 percent last month. Electronics were down more than 2 percent. Even sales at general-merchandise stores were down. About the only major retailer to post higher sales was Wal-Mart. With consumers in no mood to shop, retailers know they have to do something to drive sales. And what they're doing is emphasizing value and lower prices. For example, at the nation's more than 250 Build-A-Bear Workshops, like this one in an upscale mall near Seattle, the product mix has changed.
Ms. BRANDY SCOTATOWAR (Assistant Manager, Build-A-Bear Workshop, Seattle, Washington): So, let me tell you what we've got, what kind of $10-dollar bears we have. We have the Honey Cub, and then we also have the Koala, which is also a favorite.
KAUFMAN: That's assistant store manager Brandy Scotatowar(ph). Last year, the company had very few $10-dollar bears that could be stuffed and personalized. This year, there are lots of them, and they are the first thing you see when you enter the store. The company is advertising the lower prices, hoping to draw in shoppers such as Jodie Song(ph).
(Soundbite of interview)
KAUFMAN: Are you going to be more circumspect in your buying this season?
Ms. JODIE SONG (Patron, Build-A-Bear Workshop, Seattle, Washington): Definitely. I think it's just kind of the feeling all around. We haven't lost any jobs; everything is - nothing has changed for us. But it's just the general feeling, and it's a good time to be tight.
KAUFMAN: Promoting lower prices, value, and putting things on sale early is not limited to kids' toys or mass retail. The economic gloom has reached the affluent consumer. In the past, they've continued to spend even when things were tough. But when Erin Armendinger, managing director of a retail program at the Wharton School, went to the shoe department at Saks Fifth Avenue in New York this week, this is what she found.
Ms. ERIN ARMENDINGER (Managing Director, Jay H. Baker Retailing Initiative, Wharton School, University of Pennsylvania): On that floor, there were very high-end designer shoes. Nearly the entire shoe department, save the real basics - the real classics that they roll over from season to season - except for those, every shoe on that floor was 40 percent off. That's a real sign of the times.
KAUFMAN: In short, though retailers will struggle to make money this holiday season, consumers will find lots of bargains in all kinds of stores. Wendy Kaufman, NPR News, Seattle.
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Retail Sales Drop Record 2.8 Percent In October
U.S. retailers saw a record drop in sales in October, the Commerce Department said Friday, as tighter credit and the faltering economy spooked consumers into sharp cutbacks in their spending.
Retail sales fell by 2.8 percent last month, led by a huge drop in auto sales. It was the largest decline since the index began in 1992. The previous record was a 2.65 percent drop in November 2001.
In September, sales fell by a revised 1.3 percent, a figure that was previously reported as a 1.2 percent decrease.
The weakness was led by a 5.5 percent plunge in auto sales, with carmakers reporting unit sales falling to their lowest level in 17 years. Excluding autos, retail sales fell 2.2 percent, also a record decline.
The report shows that sales at general merchandise stores such as Wal-Mart fell 0.4 percent, while sales at specialty clothing stores were down 1.4 percent. Sales at furniture stores dropped by 2.5 percent, with sales at appliance stores and sporting goods stores also showing declines.
Consumer spending accounts for two-thirds of total economic activity. The gross domestic product fell 0.3 percent at an annual rate during the third quarter, the strongest signal yet that the country has fallen into a recession.
Many economists believe the GDP will drop by an even bigger amount in the current October-December period and will continue falling through the first two quarters of next year, likely sparking the worst recession since the 1981-1982 downturn.
The government reported last week that the unemployment rate shot up to 6.5 percent in October, and many economists believe it will top 8 percent before the economy starts to mount a sustained rebound.
From wire service reports
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