This week, retailers such as Macy’s, JC Penney and Kohl’s have reported mediocre results. They’ve blamed this on a variety of factors, such as delayed inventory shipments, bad weather and fewer international tourists, although overall Americans are spending less and less on clothes and home furnishings. Such a trend could hurt these companies’ businesses in the years to come.
Theoretically, the decrease in gas prices means that consumers have more disposable income, and can travel further to get it. However, the Commerce Department recently reported that US retail sales were flat, as shoppers seemed interested in other options. A recent report from Morgan Stanley shows that millennial consumers have been spending more on such expenses as rent, cell phones and personal services than young people were a decade ago. This means that there’s less money available for buying clothes. Millennials, the generation in their 20s and 30s, are becoming an ever-increasing presence in the consumer market. And soon, they’re set to overtake Baby Boomers as the largest consuming class.
Macy’s CFO, Karen Hoguet, blamed a decrease in sales on electronics and online subscriptions, such as Netflix and cable services, that are leading to a decrease in market for retail. Although some products, like cosmetics, are selling well with the younger generation, Hoguet told analysts that today’s customers had priorities other than clothing and housewares. According to Hoguet, shoppers have been spending more of their disposable income on such categories that you can’t get at a Macy’s, such as cars, healthcare, home improvement and electronics. Even when people do buy clothes, they most likely won’t be willing to pay full-price for them. According to retail expert Robin Lewis, this is because consumers have become addicted to promotions. Nowadays, such things as coupons, discounts, loyalty points and gifts-with-purchase have become more the rule than the exception, and young people have jumped on this opportunity to spend less.