Retailers are saying that with the back-to-school season at hand, also known as the second busiest selling season for the year, consumer spending is more conservative than ever before. While the U.S. economy is recovering from the financial crisis, the median household income is still comparatively lower than it was before the 2007-2009 recession.
"I don't think this is going to be a blowout year. I think this is going to be a little bit of a tough year," John Barbour, CEO of LeapFrog Enterprises Inc noted about the rest of 2013. "People have less money in their pockets."
Retailers are waiting longer than usual to place their orders thanks to better inventory tools. This could mean higher profit margins could be expected for the later part of the year since retailers will not be required to offer discounted items due to excess inventory. The move is good at some point, but there is also a risk involved if retailers will not carry enough stock that would suit the customer demand.
"From their perspective, it is better to have missed sales than to end up having too much inventory, which you have to mark down," BB&T Capital Markets analyst Anthony Chukumba said.
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