Consumer Spending Is Up, Physical Stores Missing Out

It’s news we haven’t heard in quite some time: consumer spending is up and confidence seems to be marching right along side it. However, the impact of that spending isn’t universal, as reports suggest that brick-and-mortar stores aren’t enjoying the renaissance so fully as online and mobile alternatives.

Word from the US Commerce Department says that retail sales are up fully 0.6 percent from June’s figures for July, and even June’s actual figures were revised upward. Good news all around, as many were expecting the summer to be a bit on the slack side shopping-wise. Reasonable enough; more people are on vacation, and fewer are shopping, at least until the back to school sales hit with the second half of August.

The improved consumer largesse, however, did not boil out evenly. The biggest retailers—stores like Dillard’s, Kohl’s and Macy’s—are seeing weakness. Dick’s Sporting Goods recently took a hit to its share price as earnings fell below estimates, and Advance Auto Parts saw a similar fate. However, some physical retailers—especially those dealing in large and bulky items like garden equipment and building supply—are still seeing satisfactory results.

Here’s the bad news, however: those gains aren’t likely to grow much soon. Wages are growing, but slowly, and consumers aren’t saving much, which means the consumer is already pretty much all in. Consumers also expect low prices, and have the tools to force savings around every corner thanks to smartphones.

Thus we see that economic expansion is coming, albeit slowly, and isn’t likely to step up further. Granted, with the arrival of late October we’ll start seeing the holiday shopping season fire up, but much of that will go to the online shopping venues.

What can the brick-and-mortar merchant do here? Well, offering bigger and bulkier items might be a good start. So too is a greater focus on the customer experience, and on items not easily found online. Remember, immediacy and instant gratification are brick-and-mortar’s best friends here; buy it today, take it home today. Incorporate that mobile element into things; let your customers use mobile payments and encourage price matching.

The economy can only help so much; with online and mobile alternatives, businesses will have to work hard to hold a current market, let alone gather a new one.