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

The Census Bureau Retail Sales Report reported nothing new under the sun (download here).

Auto sales plummeted immediately after the Federal “cash for clunkers” program expired (see chart below), and total sales ex-auto, while up slightly from August, were down significantly from the previous September.

Across the board, virtually all product segments saw declines from September 2008.   Food, general merchandise, and sporting goods were more or less flat and health products were up slightly. But everything else was down, and generally by a lot.

So, while things are improving, we are still a LONG way from a full recovery.

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

The Census Bureau released the latest retail sales figures, and at first glance, they don’t look that bad.  Sales were up nearly 3% over July’s numbers — implying, perhaps, that the consumer is starting to dust off his wallet and shop again (See chart below).  A closer look at the report quickly extinguishes this hope. Read the rest of this entry »

Interesting interview with retail maven Howard Davidowitz:

Mr. Davidowitz sees a continued string of bankruptcies in the retail sector with “hundreds of thousands” of stores closing. The retail sectors he sees surviving and prospering? Pharmacies, deep discounters like “dollar stores,” and not much else!

Charles Sizemore, CFA

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

The Census Bureau reported advanced retail sales for July today, and we had a few surprises.  Year-over-year, retail sales remain horrid though are showing signs of improvement.  Strangely, autos — which had been seeing year-over-year declines in excess of 20% for most of 2009 — actually outpaced overall retail spending, pulling the averages up!  

The federal “Cash for Clunkers” plan was obviously a major driver of this, so we should take these gains with the proverbial grain of salt.

On a month-over-month basis retail sales were down, breaking a decent run of improving months.  So much for the recession being over….

This is more or less what we expect from the retail economy for the next several years: a positive month here, a negative month there….  Retail sales will not march continuously downward, but they will certainly have a hard time gaining any real momentum.   How could they, given that the largest and richest generation in history is now massively cutting back spending and instead saving for retirement?

Charles Sizemore, CFA

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