subject: The July Retail Consumer Confidence Index [print this page] The Conference Board reported yesterday that its Consumer Confidence Index declined for a second month in a row in July. The Index stood at 46.6, down from 49.3 in June. The Index is made up of two internals, the Present Situation Index and the Expectations Index. Both of these were down in July as well.
Lynn Franco, Director of The Conference Board Consumer Research Center said, "The decline in the Present Situation Index was caused primarily by a worsening job market, as the percent of consumers claiming jobs are hard to get rose sharply. The decline in the Expectations Index was more the result of an increase in the proportion of consumers expecting no change in business and labor market conditions, as opposed to an increase in the percent of consumers expecting conditions to deteriorate further. However, more consumers are pessimistic about their income expectations, which does not bode well for spending in the months ahead."
Nobody should be surprised by this news. For all of the talk about the economy bottoming out and the recession coming to an end, it seems that almost everybody has been impacted by a job loss or knows somebody who has. Unemployment continues to rise, and is expected to do so for another six to twelve months. There are few experts who believe that any recovery that might begin this fall will be anything better than very slow and modest.
Consumer spending patterns have clearly changed, and there's little reason to believe those changes are going to be reversed any time in the foreseeable future. That's reflected each month by the same-store results that the major national chains report, especially among those chains whose merchandise is highly discretionary.
For independent retailers, this should be interpreted as a clear signal that the back half is very likely to be just as difficult as the first half. Beyond that, however, there's another point to be made. This downturn is not so much a recession as it is a reset. We're not likely to recover so much as we'll resume growing from a new, lower baseline. Things have changed.
In this environment, business as usual will not do. Any independent retailer who believes that they can continue to do what they've always done simply is not paying attention. Today, there's just not as much money being spent, so each retailer has to work that much harder to earn their share. I saw an American Express commercial last night which addressed what it will take to be successful in this new world. One word jumped out at me: relentless. For independent retailers, success will belong to those who are relentless in pursuing their passion, focusing their efforts, adding value to their value proposition, engaging their customers and creating distinctive and memorable shopping experiences.
