As Americans spend more money on doing things, not buying things, department stores are losing out.
A rebound in overall spending at retailers, which grew 0.6 percent in July from the previous month, has eluded department stores, where sales dropped 0.8 percent.
Data released by the Commerce Department shows that American consumers are putting what little extra money they do have to spend each month into eating out, upgrading their cars or fixing up their homes, as well as spending on sports gear, health and beauty. Spending at restaurants and bars has jumped more than 9 percent this year through July compared with the same period last year, and on autos by more than 7 percent, according to the agency.
Analysts say a wider shift is afoot in the mind of the American consumer, spurred by the popularity of a growing body of scientific studies that appear to show that experiences, not objects, bring the most happiness. The Internet is bursting with the “Buy Experiences, Not Things” type of stories that could give retailing executives nightmares.
Millennials — the 20- and 30-something consumers whom marketers covet — would rather spend their hard-won cash on out-of-town vacations, meals with friends, gym memberships and, of course, their smartphones, many surveys suggest.
The shift in consumer mind-sets, especially among younger consumers, is hurting major department store chains like Macy’s and Kohl’s, which both reported tepid quarterly earnings this week.
The picture at a higher-end department store chain, Nordstrom, has been much prettier, underscoring how the economic recovery has benefited the nation’s wealthiest, while income growth for the middle class has been more elusive. Nordstrom’s profits topped estimates as comparable sales jumped nearly 5 percent, sending its share price soaring.Stores Suffer from a Shift in behavior of Buyers (New York Times)
But even upscale retailers are facing some trouble...
On Tuesday, McDonald's announced it is planning to close 184 restaurants across the United States this year, 59 more than it is planning to open. The scale-back is something of a historic negative milestone, because it hasn't happened in more than 40 years. The last time the company contracted was in 1970.http://www.washingtonpost.com/news/wonkblog/wp/2015/08/13/mcdonalds-is-shrinking/
Part of McDonald's woes are due to the growth of new-age competition. Chipotle Mexican Grill, which has become a staple for many Americans, is perhaps the best example. But the chain's popularity is emblematic of a larger trend away from traditional fast food outlets. Chipotle belongs to a new, somewhat nebulous category called fast casual, which also includes Panera and Shake Shack. The new wave, which is almost but not quite fast food, has proved that Americans are willing to pay a little extra if it means better quality and fresher ingredients. It now accounts for more than five percent of all restaurant traffic, roughly five times what it did 15 years ago.
But McDonald's has also been a victim of its own lack of self-awareness. By offering salads, wraps, and other healthier fare, the chain has confused its place in the American food system. People visit cheap burger chains for a respite from their (hopefully) healthier dietary regimen, not another reminder that they could be eating something healthier.
The argument over whether the nation is reaching Peak Car — the point after which permanent decline sets in — will continue for years, but it’s already clear that the quality of Americans’ relationship with cars has shifted.America’s once magical — now mundane — love affair with cars (Washington Post)
Ford’s resident futurist, Sheryl Connelly, points to data showing that millennials often like to rent rather than buy products. Ford research finds that 74 percent of adults try to use their time in motion “to accomplish something else.” So the automaker is dreaming up vehicles that let users do something — anything! — in a state of “global gridlock,” chief executive Bill Ford’s term for a world in which more than half of people live in megacities.
The return of young people to city centers brings a permanent pivot in how people think about getting around, says Gabe Klein, a Zipcar founder who went on to run the city transportation departments in Chicago and Washington.
Klein, 44, says cars have become a burden, a symbol of a model of living gone sour. “We were sold a bill of goods by the government,” he says, “by real estate developers who wanted to sell tract housing far from the city, by car companies who sold us this new lifestyle of living in the suburbs and commuting in.”
That suburban model is not something to rebuild from the ravages of recession, but rather a lifestyle that technology will let Americans discard, Klein argues. “Car culture is really a brief 50- or 60-year blip in history,” he says.
At 22, fresh out of college, Regina Catipon finds herself a commuter, traveling on weekdays from her parents’ place in Shady Grove to her downtown Washington office. She has no car, no license, no immediate intention of getting either. Her brother was 22 when he finally got his.
Catipon isn’t averse to cars, though she did delay learning to drive after a good friend in high school was hit by a car at 16 and died from head injuries. Despite that trauma, “I actually love cars,” Catipon says. She’s a fan of “Top Gear,” the British TV show about car buffs, and she has always wanted a motorcycle. But her social life mostly takes place in the city, where parking and traffic make cars a hassle. And both Catipon and her boyfriend have big student loan debts, “so it seems almost irresponsible to take out a car loan when we’re either looking for work or getting established,” she says.
For now, her plan is to find a way to move into the city, in part to reduce the need for a car. Rebellion plays little role in her thinking about cars. “People talk about the open road,” she says, “but in my experience, the road is tolls and traffic cameras.”
Nearly seven in 10 millennials, or 69% of those ages 18 to 34, say they have it harder than previous generations in securing a middle-class lifestyle. But the story doesn’t stop at younger Americans feeling they have it harder than older generations. Seventy-seven percent of seniors say that young people today have a harder time achieving a secure middle-class lifestyle compared with their counterparts 20 or 30 years ago. The share of seniors with this view is striking, particularly given that many of them have lived through the Great Depression, World War II, Stagflation, the stock market crash of 1987, and, most recently, the Great Recession.Are Homeownership and the Middle Class Out of Reach for Millennials? (Wall Street Jouranl)
More than seven in 10 Americans also believe that millennials have it harder when it comes to saving for retirement (81%); owning a home (76%); having a stable, decent-paying job (71%); and having stable, affordable housing (71%).