Dive Brief:
- Americans have become addicted to discount prices, analysts say, and that fact is effecting full-price retailers’ financial performance.
- Shoppers started to avoid full-price retailers completely during the Great Recession, and now look for deals on whatever they need, including food and clothing.
- Even with an improved economic climate, retail sales have slowed to 0.1% growth, indicating that consumers are saving for big-ticket items.
Dive Insight:
Americans never pay list price, according to analysts from Stifel and other companies looking at third-quarter results from major department store chains such as Macy’s and Nordstrom. Macy’s same-store sales fell for the third quarter in a row, and its shares have lost more than 40% of their value this year, while Nordstrom is down by a third.
Nordstrom Rack, the company’s off-price chain, is doing better than mainline stores, with 12% sales growth in the third quarter. To attract the discount shopper, Macy’s launched its own closeout spinoff, Macy’s Backstage, this fall. While off-price chains can capture sales in the short term, they can also erode brand equity and expand discount-seeking behavior in the longer run.
The larger problem? Overall retail sales are growing at a sluggish 0.1%, in spite of the economy’s improvement. It appears that consumers are increasingly saving up for big-ticket items such as automobiles, real estate, consumer electronics, and “experiences” instead of accumulating a lot of stuff.