An interview with Dana Telsey, CEO and Chief Research Officer of Telsey Advisory Group.
Miller: What is your overall view of the health of the overall economy in the U.S. and the consumer as it relates to retail sales, broken down by segment if you wish?
Telsey: Consumer spending remains choppy. We’re seeing that many consumers certainly have a fixed wallet. They have more choice than they’ve ever had before because they can price compare across different channels. I think the macro-factors, whether it’s the improving housing market, consumer confidence which is up, lower unemployment, stock markets performing, inflation and gas prices easing a bit – those are the factors that we’re currently seeing out there. And, combined with a labor market that’s adding an average of nearly 160,000 – 200,000 jobs on a monthly basis, that’s what’s translating into more confidence in household and personal financial situations. You have around two-thirds of the population that are in decent shape financially with a lower one-third tier that really is troubled. But there are clearly some headwinds. Rising interest rates have the potential to offset the momentum in housing, even though home prices continue to appreciate materially. Gas prices are rising – the cost per gallon has increased to around $3.61 on a national average basis, which is up 11.3% year-to-date. Asia’s economic performance is mixed, but U.S. stock market valuations are high. So the question is “what’s next?”
The higher interest rates that we’ve experienced, historical stock price performance and how different industries have performed in the consumer sector, it’s very interesting. Going back three months, there have been only four different retail sectors that outperformed the market: home improvement, general merchandise, consumer electronics, and office supplies. The fixed-wallet mentality I mentioned earlier is leading retailers to be cautious and conservative in their guidance and how they plan their spending. Consumers now have the ability to shop where they want, whenever they want, and the multi-channel opportunity allows prices to be compared. As a result, events are really key in order to drive traffic. And events with promotions are even more effective. 2
Miller: You had mentioned the price comparison opportunities that consumers have today online and multi-channel – what consumer trends concern you or encourage you in the near term?
Telsey: With respect to multi-channel, what every company is trying to figure out is delivery…