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Those Quirky US Consumers

Despite being in “bunker mode,” in which virtually all non-essential spending has been trimmed or eliminated, consumers have continued to buy shoes by the box loads (see “A Not-So-Guilty Pleasure“).

The question begs to be asked: Why?

The New York Times writes “Retailing executives and analysts offer varying, occasionally wacky, explanations. The one favored by many of them is that consumers consider shoes more of a necessity than, say, dresses, cuff links or handbags, so people feel less guilt about buying them.”

Shoes are generally cheaper than most of the other items mentioned. Perhaps this is a better explanation, however:

Shoe buyers for major retailing chains said sales were also driven by styles for children and babies, especially during the back-to-school months. Children regularly grow out of shoes and parents, while willing to sacrifice when it comes to themselves, are typically loath to scrimp on their children.

When a child’s foot grows, you really have no choice but to buy shoes for him.  In this sense, children’s clothes can be thought of as a recession resistant sub-industry, particularly given the recent surge in births.  This recent baby boomlet gives the market for children’s clothes strong demographic support in the next decade.   Even if an adult man or woman is content to turnover their wardrobe a little less frequently when times are hard, some amount of spending is needed for their growing kids.  They might buy cheaper brands and buy fewer pieces overall, but some amount of spending is going to happen.  You can’t rightfully send your kid to school with sleeves and pants legs that are half a foot too short.

The Times also had another interesting theory to explain the resiliency of shoe sales:

Among the more curious explanations proffered for the relative strength of shoe sales is that women — who make up the lion’s share of the American shoe market — get an emotional lift from shoe shopping in a way they do not when trying on jeans and cocktail dresses.

During depressions, people are…well…depressed.  The “retail therapy” of shoe buying might create a sense of escapism from current economic woes.

At any rate,  this goes to show that in a bad economy, pockets of strength can be found in some unexpected places.

Charles Sizemore, CFA
Co-author of the recently-published Boom or Bust: Understanding and Profiting from a Changing Consumer Economy