Logistics business: NRF says consumer spending remains down
Jeff Berman, Group News Editor -- Supply Chain Management Review, 10/1/2009
Even though the holiday shopping season is a few weeks off, it appears that consumers are still largely on the sidelines when it comes to making purchases, according to research released by the National Retail Federation (NRF).
With Halloween about a month away, data from the NRF’s 2009 Halloween Intentions and Action Survey—conducted by BIGresearch—stated that consumers are expected to spend less on Halloween than last year, with an average spending tally of $56.31 that is down from $66.54 a year ago, with total Halloween spending expected to hit $4.75 billion. About 30 percent (29.6) of respondents to the survey said that the economy will impact their Halloween spending, with 80 percent planning to spend less overall and a slight decline in the number of people planning to even celebrate the holiday this year.
This data is akin to what is happening across all modes of the freight transportation and logistics markets, given the low tonnage volumes amidst a perceived “bottoming” of the economy.
Even though the economy remains down, there are some signs of freight volumes on the mend, including railroad and intermodal numbers released by the Association of American Railroads and the American Trucking Associations’ report this week that August truck tonnage was up 2.1 percent for the second straight month.
Many industry experts have noted that while the economy may indeed have bottomed, it will be a while before consumers “come out of the bunker” and start spending money again in a meaningful way anytime soon. This could be ominous for the industry, considering that consumer spending accounts for nearly 70 percent of all domestic economic activity.
What’s more, The Conference Board Consumer Index for September was lacking in positive news compared to August, when it registered a 54.1 rating (1985=1000), with September coming in at 53.1. The Conference Board also reported that the Present Situation Index fell from 22.7 to 25.4 from August to September and the Expectations Index dipped from 73.8 to 73.3.
And with Peak Season upon us, signs indicate that peak may be a thing of the past for the fourth straight year, due in large part to low consumer spending.
A recent LM reader survey of 448 logistics and freight transportation executives found that 82 percent think this year’s Peak Season will be similar or less active compared to last year, with only 18 percent—or slightly more than 80 respondents—saying it will be more active.
Reasons for another slow peak cited by respondents included: less demand, a need for lower inventory levels, the recession, sluggish consumer spending, and low import levels, among others.
“There are no positive signs that customer demand has increased to previous year’s levels, or even close to them,” a shipper told LM. “Our customers are requesting Just-In-Time shipments instead of building inventory in their warehouses. And retailers still have excess inventory and with the recession ongoing, they are not ramping up their inventories.
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