Retail Sales Rise for a Change

Consumers Spending More, Turning to Discounters, Industry Studies Show

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, which 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 showed 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 P. Niemira, chief economist and director of research at the council of shopping centers.

"It's a mind-set 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."

Retailers already have begun their sales and promotions aimed at getting people to do their holiday shopping early. Analysts offered a decidedly mixed picture of the holidays, with some projecting fluctuations and others forecasting profits.

Indeed, TJX, which operates TJ Maxx and Marshalls, raised its forecast for the third and fourth quarters based on a 7 percent sales increase in September and better-than-expected store traffic.

"As we begin the holiday-selling season, our stores look extremely fresh and we continue to see plentiful and exciting opportunities in the marketplace," Sherry Lang, the company's senior vice president for investor and public relations, said in an investor call Thursday.

Wholesale clubs, such as BJ's and Costco, posted the best sales figures. Sales at the clubs, excluding fuel, were up 4.2 percent in September, compared with 2.0 percent in August and a 1.5 percent dip in July.

For the first time since April, discounters, such as Target, posted positive numbers. Sales in the discount category increased 0.5 percent in September, compared with a 1 percent decline in August and a 4.1 percent drop in July. A company official said Target had strong sales in health and beauty products and weaker sales in women's apparel and household goods.

Staff researcher Eddy Palanzo contributed to this report.