Consumers Still Shopping As U.S. Goes To War.

As the United States entered war with Iraq, the March NRF-BTM Retail Executive Opinion Survey found company executives expect consumers to shrink their expenditures by 1.0 percent on a year-over-year basis. This survey, taken between March 14 and March 20, echoed an earlier NRF-BTM survey result of retail executives in December.

“This is very encouraging news for the retail industry,” said NRF President and CEO Tracy Mullin. “Retail executives’ optimism appears to be holding steady as consumers have not pulled back on shopping as much as some analysts feared, given the current geopolitical and economic climate.”

The latest Retail Executive Opinion Survey, a monthly index by the National Retail Federation (NRF) and the Bank of Tokyo-Mitsubishi Ltd. (BTM), shows the major indicators, such as store traffic, sales and inventories, remaining steady for March. The Retail Sector Performance Index (RSPI) for March remained unchanged from February with a reading of 42.9 percent. (The RSPI measures retail executives’ evaluations of monthly sales, customer traffic, the average transaction per customer, employment, inventories and a six-month-ahead sales outlook expectation. The RSPI is based on a scale of 0% – 100% with 50% equaling normal.)

“Even though we are at war, consumers are still shopping,” said Michael Niemira, Senior Retail Analyst, Bank of Tokyo-Mitsubishi, Ltd. “We expect consumers will remain cautious with their spending and will probably put off purchasing big ticket items until there is more certainty in the economy. Much of this will depend on the length of the war and how quickly it takes for the economy to recover.”

For March, the Current Demand Index (average of sales and traffic), Operations Index (average of employment and inventories) and Demand Outlook (six-month ahead expectation of sales) were 42.9 percent, suggesting operational measures were in sync with current and anticipated demand.

The March Industry Pricing Index, which is an assessment of the industry’s discounting or pricing power, decreased to 25.0 percent in March as retailers shifted promotions to support sales.

To view charts CLICK above on ‘More Images’.