Hard Goods Are The Weakest Link In March Sales.

General merchandise and apparel specialty stores weathered the gusts of March better than most, according to the National Retail Federation (NRF). Responding to just-released figures from the Census Bureau, NRF noted that sales in the GAF category (general merchandise, apparel, furniture and home furnishings) are reflecting the general softness in the economy, as weakness continued in the durable goods sector, which fell 0.7 percent unadjusted from last month and 1.5 percent year-over-year. GAF sales have declined in four out of the past five months. For the first quarter of 2001, GAF sales are up 2.5 percent from the same quarter a year ago.

“Both the weakened economy and very difficult sales comparisons against the previous year – when GAF sales jumped 8.7 percent – account for the modest gains we are seeing now,” said NRF Chief Economist Rosalind Wells. “We knew that durables would be the hardest hit by the economic slowdown.”

Soft goods retailers have fared better amid recent economic conditions. General merchandise and apparel specialty stores both experienced year-over-year sales gains in March, by an unadjusted 3.0 percent and 4.9 percent respectively. Furniture and home furnishings stores were the only GAF category stores that saw declines in March, dropping 0.7 percent unadjusted from February and 0.7 percent year-to-year.

“The slowdown in consumer spending has been a result of a more cautious consumer. With employment and income growing less rapidly and the erosion of the “wealth effect” due to a declining stock market, consumers have become a bit more reticent in their spending. However, spending is not contracting, it is merely growing at a more modest pace,” emphasized Wells. “Hence, we believe a recession can be avoided and expect GAF sales gains to improve as the year progresses. This is based on our belief that Federal Reserve policy to reduce interest rates will be successful in stimulating economic growth later in the year. We are forecasting a 4.2 percent increase in GAF sales for this year.”