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2012 not looking good for consumer spending

BY Katherine Field Boccaccio

NEW YORK — The Deloitte Consumer Spending Index continued on a downward trend in January, and consumer spending will face additional economic headwinds in 2012, according to Deloitte. The index tracks consumer cash flow as an indicator of future consumer spending.

"A sharp fall in real home prices primarily contributed to the decline in the Index," said Carl Steidtmann, Deloitte’s chief economist and author of the monthly index. "While initial unemployment claims ticked lower, real wages and the tax burden showed no improvement leaving little to offset the housing market’s negative effect on the Index."

Deloitte’s analysis of U.S. Commerce Department data indicates that the weakness across economic fundamentals over the past several months may continue and further crimp consumer spending in 2012.

Real incomes declined on a year-over-year basis for the fifth month in a row. While a social security tax cut boosted incomes in January 2011, incomes are set to continue falling without an additional cut this year.

New and existing home sales remain weak, and prices continue to decelerate. Current government proposals to improve the situation, even if approved, will take time to develop, implement and affect the housing market.

Tax increases at the state and local level are raising the overall level of taxation and reducing consumer purchasing power.

The index, which comprises four components — tax burden, initial unemployment claims, real wages and real home prices — fell to 1.73 from a revised reading of 1.90 the previous month.

"The likelihood that consumer spending power will be further stretched this year puts a brighter spotlight on one area of retail — pricing," said Alison Paul, vice chairman and Deloitte’s retail & distribution sector leader. "While consumers may be price conscious, retailers need to pursue strategies that drive profitability, not just traffic and sales volume, while also taking into account broader economic events that affect their entire operation.”

A cross-functional approach that includes technology, store operations, inventory management, merchandising and marketing, said Paul, is necessary to develop an effective pricing strategy for a retailer’s multiple sales channels.

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Whole Foods senior purchasing exec to retire

BY DSN STAFF

AUSTIN, Texas — Michael Besancon, senior global VP purchasing, distribution and communications for Whole Foods, will retire from the company after more than 17 years of service.

"Having worked in our line of business from soup to nuts, Michael is absolutely one of the most knowledgeable natural and organic foods pioneers," said Walter Robb, co-CEO of Whole Foods. "He has been an outstanding leader at Whole Foods, and has earned well-deserved respect throughout our company and the industry. We will truly miss his wisdom and compassion."

At Whole Foods, Besancon served as regional VP purchasing and as regional president the company’s Southern Pacific region and as regional president for the Mid-Atlantic region. He led the company’s Green Mission task force, guiding the purchase of an unprecedented 100% electricity offset of wind renewable energy credits starting in 2006.

Prior to joining Whole Foods, Besancon was the co-owner of Follow Your Heart, a natural grocery store in Los Angeles and was VP at Nature’s Best Distributors.

"It’s been an honor to be part of the Whole Foods family for all of these years growing from 30 stores when I started in 1994 to more than 300 today," said Besancon. "I’m proud to have worked with so many dedicated, passionate leaders and team members who bring the very best natural and organic products to the marketplace while believing in the greater purpose of making the world a better place through their work. I’m thankful for the amazing journey."

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Solid front-end sales help drive Shoppers Drug Mart Q4 sales boost

BY Antoinette Alexander

TORONTO — Shoppers Drug Mart announced on Thursday a boost in fourth-quarter sales thanks to moderate sales growth in pharmacy and strong results at the front end.

Sales for the quarter, ended Dec. 31, 2011, totaled C$2.6 billion, up 4.3% compared with the year-ago period. Prescription sales rose 2.8% to C$1.8 billion. On a same-store basis, prescription sales rose 2.3%.

At the front end, sales were C$1.4 billion, up 5.5% compared with the year-ago period. The company noted that it experienced particularly strong sales gains in beauty, confection and convenient food items. Growth also was aided by marketing campaigns and promotions, strong seasonal programs and solid execution at the store level. On a same-store basis, front-store sales increased 4.4%.

Net earnings during the quarter were C$176 million, compared with C$169 million in the year-ago period. On a diluted basis, net earnings per share were 82 Canadian cents, compared with 78 Canadian cents in the year-ago period.

“Looking ahead, the strength of our brand, the quality of our assets and the power of our value proposition, together with the dedication and commitment of our associate-owners and their teams at the store level, have us well positioned to confront the challenges and capitalize on the opportunities in the rapidly evolving pharmacy marketplace,” stated Domenic Pilla, president and CEO of Shoppers Drug Mart.

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