Retail creeps upward

WASHINGTON – Consumers last month began loosening the grip on their wallets, increasing spending slightly for the first time since the summer of 2008 mainly at discount retailers and on such items as health and beauty products and back-to-school merchandise, according to retail sales figures released Thursday.

Same-store sales – a key indicator based on transactions at stores open at least one year – inched up, according to two new industry studies, exceeding analysts’ expectations. The International Council of Shopping Centers, which had forecast a monthly decline of 2 percent, reported that same-store sales in September increased 0.1 percent from the same month last year. Retail Forward, a consulting firm that studies the industry and shopping behavior, said same-store sales rose 0.8 percent.

The increase is far from the boom days in September 2006 when sales rose by 6.2 percent. Still, the data offered some analysts hope that retailers, who earn a substantial portion of their revenue during the crucial Christmas season, would have a happier holiday this year than last.

Analysts attributed the sales increase in part to the late Labor Day, which gave retailers a few more days to offer discounts associated with the holiday. But the numbers, they said, also indicate that consumer confidence is beginning to return with signs of higher foot traffic in stores and more money being spent per purchase.

“It is a big deal,” said Frank Badillo, senior economist at Retail Forward in Columbus, Ohio, which based its analysis on sales figures at 32 retailers, most of which were apparel stores.

Consumer spending represents two-thirds of the U.S. economy. Even with unemployment still high, salaries still frozen or being cut and investment income still off, analysts said they were seeing early indicators that discretionary spending is on its way to making a comeback.

A Gallup poll released Thursday shows consumer confidence in September reached its highest level this year for all income groups.

In the International Council of Shopping Centers report, sales in the luxury segment were down 8.5 percent in September. That was the best showing of the year – sales were off by as much as 20.3 percent in March.

“Typically, what you see (in recoveries) is that the consumer will step up purchasing for reasons you can’t say are supported economically” by higher incomes, said Michael Niemira, chief economist and director of research at the council of shopping centers.

“It’s a mindset change. If we look at what could be propelling consumers, I think it’s pent-up demand,” he added.

“The savings rate has gone up by 4 percent and the consumer has more wherewithal to spend if they think it’s the right time.”