February Retail Spending Expected to Maintain Janu
Columbus, OH, February 6, 2006 - Spending at retail this month is expected to hold steady at January's buoyant pace. Retail Forward's Future Spending Index clocked in at 99.6 for February, nearly matching the 99.7 value for last month. The index remains below year-ago levels, however, indicating a moderation in spending compared with last February's strong rate.
"Shoppers remain undaunted largely because of better cash flow this month across each of the key income segments," said Steve Spiwak, an economist with Retail Forward. "This is being offset somewhat by the downtrend in home buying since autumn, which will discourage spending primarily on homegoods. Still, the near-term environment remains favorable for the retail sector as a whole."
The latest ShopperScape results also show that there is still a large amount of untapped gift card balances from the holidays, which will goose spending in the months ahead. But don't expect Valentine's Day to deliver much stimulation to February growth. The vast majority of shoppers say that they plan to either spend the same on gifts as last year-or nothing at all.
The Future Spending Index moved higher among Up Market households but slipped for Down and Middle Market shoppers.
The index for Up Market households (incomes greater than $75,000) improved to 98.5 for February from 95.9 last month. That pickup in optimism was generated by stronger incomes and higher stock values than a year ago. A falloff in home buying among these relatively affluent households will restrain the outlook a bit, though.
After jumping to 102.1 in January, the index for Middle Market households (incomes between $22,500 and $75,000) eased to 100.6 for February. A moderation in home buying and less mortgage refinancing activity, which results in fewer home-equity cash outs, pulled the index lower. Assessments of jobs and incomes remain buoyant, however, which will provide support for spending in February.
The index for Down Market households (incomes less than $22,500) slipped again in February following a recent peak during the holidays. The 99.8 February showing is down from 103.0 in January and 109.5 in December. That falloff in spending intentions has tracked with a rise in job concerns early this year among these households. A sharp decline in home buying contributed to the decrease.
No need to feel left out. This month's ShopperScape results indicate that you won't be alone if you don't receive a gift this Valentine's Day. And even if you do, don't expect much beyond what you received last year.
