Consumers' increasing frugality impacts retailers

As reported by the Wall Street Journal, American consumers were cautious about their spending this year during the back-to-school season.  The Wall Street Journal stated that MasterCard Advisors reported that "Shoppers spent slightly more last month than they had the year before...but in nearly every category, the sales numbers were far short of 2008 levels..."  This consumer behavior reveals that the economy has been slow to recover.  With the economy in a such a state of slow recovery, people are becoming more frugal when making purchases.  The Wall Street Journal reported that shoppers only bought "basic items" and latched on to discounts and sale items when shopping for back-to-school items.

                                                                                          The Wall Street Journal

 Retail analysts project that this holiday season, consumers will continue practicing their frugality.  Christmas shopping usually boosts the sales of retail stores, but this season it may not bring in that much business.  In the hopes of increasing sales, retailers will be forced into strong price competition; retailers will lower their prices to attract consumers to spend.  In order to eliminate inventory surpluses, retailers will vigorously promote low prices, discounts, and "deals," such as "buy one, get one half off."  Retailers will be faced with the challenge of attracting frugal consumers and convincing them to spend their money.

Read the article online at: http://online.wsj.com/article/SB10001424052748704421104575463861273438000.html?mod=WSJ_article_MoreIn_Business#articleTabs%3Darticle

Posted by Bria G.