Retail Sales Report Shows Record Low for Gas Sales

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Retail Sales Report Shows Record Low for Gas Sales

For the month of September, consumer confidence rose and retailers saw more clothing, furniture and department sales, but retail sales dropped due to a record decline in gasoline sales, reported The Associated Press.

Retail sales fell more than expected, by 0.4 percent, when including gasoline sales. However, when those sales are excluded, retail sales increased 0.6 percent, according to Commerce Department reports. The September retail sales report noted that sales at gas stations dropped by a record 9.3 percent, and prices at the pump dropped 13 percent during the month.

Another report from the University of Michigan found that the drop in gas prices helped consumer confidence rise sharply in October, posting a preliminary 92.3 for the month, up from 85.4 in September, the AP reported. Analysts told the AP that the rise will translate to solid spending in the looming holiday season and will prevent the nation from falling into a recession.

Meanwhile, the VNU Retail Index of Current Business Conditions rose to 93.6 in August -- after dropping to a low of 85.3 in July -- and hit 102.9 in September, its highest point since December 2005.

Fifty-four percent of total respondents posted a positive evaluation of current business conditions for the month, the first time their cup was more than half full in six months.

Supermarket operators were happiest of all, as 63 percent were positive about current conditions, compared to 53 percent of convenience retailers.

After a decline in August, the Conference Board Consumer Confidence Index posted a gain in September as well. And as temperatures -- and gas prices -- cooled throughout the month of September, the department store channel recorded its best performance since January 1997, according to the International Council of Shopping Centers. At the same time, however, wholesale clubs had their weakest results since January 2005, while Wal-Mart reported a same-store increase of only 1.3 percent, compared to a 6.7 percent jump from Target.

Looking forward, retailers are more guarded in their optimism, as the VNU Index of Future Conditions reached 89.1 -- only one point higher than August but about 5 points higher than July. The gap of almost 14 points between the Current and Future Index is the widest it has been since December 2005.

In this case, all three retail groups surveyed -- grocery, convenience and mass/drug/specialty -- were about equal in their response, with 45 percent of each segment reporting a positive outlook. C-store operators were almost four times more likely than their supermarket counterparts to have a negative outlook.

When asked to speculate about the impact that aging baby boomers -- some 78 million people inching ever closer to retirement age -- would have on their business, about three-quarters reported expecting a positive impact, compared to one-quarter who were negative. This response was similar for convenience, supermarket and mass/drug/specialty retailers.

Among reasons for optimism, convenience retailers noted the following:

• As baby boomers age, they don’t buy as much per visit; however, they make more trips to the grocery store.

• Boomers like to travel.

• Our facilities are more aligned to their tastes - better food snack choices, clean, safe, premium gasoline.

• The bulk of the baby boomers grew up with our industry. As long as the industry evolves with the age by giving them what they're looking for with larger format upscale store, we'll see a positive impact.

• They will be retiring with disposable income, hopefully.

The VNU Retail Index is based on survey results received on a monthly basis from a panel of more than 500 convenience, drug, grocery, mass and specialty retailers across the country. The survey contains six questions calling for an appraisal of current business conditions and operational challenges, as well as expectations regarding business conditions, hiring and store count in the next six months.

If you are a retailer interested in joining the VNU Retail Index panel, please contact Debra Chanil, director of market research at [email protected]