Consumers will cut spending, economist warns in Tucson speech
(Arizona Daily Star, The (Tucson) (KRT) Via
Thomson Dialog NewsEdge) Apr. 10--Challenging
times are in store for the nation's retailers,
the chief economist of a major research firm
said today at the University of Arizona's Global Retailing Conference.
April 10, 2008
"It pains me to say this, but the U.S. economy
is in a recession," said Carl E. Steidtmann,
chief economist at Deloitte Research. The
economic slowdown "is beginning to dribble out
on to the consumer's balance sheet," he said.
Steidtmann spoke before an audience of retail
insiders and students at the conference, which
was organized by the university's Terry J.
Lundgren Center for Retailing and took place at
the Loews Ventana Canyon Resort.
The annual conferences are known for their
line-ups of industry heavy-weights as speakers,
including keynotes by the center's namesake,
Lundgren, who is president, CEO and chairman of Macy's Inc.
Steidtmann warned attendees that consumers are
feeling the pinch of the credit crunch and
anxiety from higher prices for gas, food and
other goods. While consumer debt has risen
dramatically over the past several years,
Steidtmann said he expects that trend to reverse in the coming years.
Going forward, consumers will likely spend less
than they earn, on average, "which will be a shock to retailers," he said.
Already automobile sales are at their worst in a
decade, he said. Apparel sales will probably also drop in 2008, he said.
Retailers will feel further pressure from
inflation, which will eat into both retailers'
and consumers' bottom lines, he said.
The one bright spot is in the grocery business,
particularly for specialty grocers and farmers
markets. Part of the upswing is because shoppers
are going out to restaurants less and cooking at home more, he said.
Another factor: "Americans are becoming somewhat
Europeanized in their demand for food," he said,
referring to the specialty food trend.
After the presentation, Nestle Purina Petcare
employees who were in the audience said they are
noticing consumers being more careful about
their purchases. In slow economic times,
consumers sometimes downgrade their pet food
brands, they said, although that isn't happening yet.
"The good thing about our industry is people
will spend more on their pets than they do on
themselves," said Michael J. D'Ambrosi, an
account executive for Nestle Purina's customer development group.
One positive effect of a slowdown in retail
sales is retailers have to work harder to
attract customers and will have to treat them
better, said Jan de Jong, worldwide retail
industry manager for Microsoft Corp. Microsoft Corp.
"They all have to fight for the same dollars," he said.
--Contact reporter Christie Smythe at 434-4083 or csmythe@azstarnet.com.
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