The Associated Press
NEW YORK - Consumers said they respond to stores that offer the service and selection they want - and not just discounts - even as they cut their spending this winter, retail industry experts said Tuesday.
On the third day of the four-day National Retail Federation conference Tuesday, retailers discussed how to survive amid a consumer spending drop off and continuing weak economy.
Fewer retailers have been attending the conference than last year, but the 10 percent drop is offset partly by foot traffic in the exhibition hall remaining steady.
In one session, John Rittenhouse, chairman and founder of consulting firm Cavallino, said a shopping survey underwritten by his firm and designed and managed by The Gordman Group found that price was more important than selection to most shoppers.
But consumers also said what mattered most was stores carrying what they promised and having low everyday prices, helpful sales people and a friendly return policy. Less important were the very things many retailers have focused on in recent months: discount coupons, loyalty programs, contests and layaway programs.
In the survey of 815 consumers in random telephone interviews, about 55 percent said they spent less in 2008 than in 2007, and 69 percent plan to spend still less in 2009.
Some industry watchers disagree, however, that consumers are not focused solely on discounts no matter what shoppers say.
"I very often find that the consumer has the perception of one thing but actions are very different," said Marshal Cohen, chief industry analyst at market research firm NPD Group Inc. "We clearly saw price was the major motivator in 2009 and that trend is going to continue."
Meanwhile, a report from The International Council of Shopping Centers-Goldman Sachs on Tuesday showed sales still slow after the weakest holiday season since record-keeping began in 1969. The chain-store index showed chain-store sales fell 2.3 percent for the week ended Jan. 10, compared with a year ago, the largest weekly sales drop in two years.
The shopping centers council, a trade group, also said it expects sales in January to decline 2 percent to 3 percent as consumer demand remains weak.
Friedman, Billings, Ramsey analyst Adrienne Tennant said in a note to investors that mall traffic has cooled down after an already-weak holiday season, partly because retailers have stepped back from promotions as they stock new products.
"We believe that the same macro elements that contributed to a very weak holiday will continue to weigh on the consumer in fiscal 2009, and we believe investors should be prepared to see largely negative (same-store sales) from most retailers for at least the next several months," she wrote.
Retailers continued to lower their forecasts and slash costs, including by cutting jobs.
Liz Claiborne Inc. cuts its earnings guidance on Tuesday and said it might report a fourth-quarter loss from continuing operations, for example. The New York-based company said steep discounts on clothing over the holiday season squeezed margins.
Luxury department store operator Neiman Marcus Group Inc. said Tuesday that it will cut approximately 375 jobs, nearly 3 percent of its work force, as the privately held company deals with the economy.
The announcement came a day after Moody's Investors Service said it may lower Neiman Marcus' credit ratings due to a 27.5 percent decline in its December same-store sales.
Even Wal-Mart Stores Inc., which had found success focusing offering a breadth of items at low prices, is feeling the pain.
On Tuesday, Daniel Binder of Jefferies & Co. lowered his share price target on Wal-Mart after it reported a smaller gain in same-store sales in December than Wall Street expected. Wal-Mart also slashed its earnings forecast. Same-store sales, considered a key indicator of a retailer's health, are sales at stores open at least a year.