Crunch squeezes consumer tech sector in the US
Latest survey suggests that the credit crunch is affecting the consumer electronics far worse than other consumer sectors in the US.
US shoppers worried by shrinking bank and retirement accounts stamped down spending across the board in September as the country's financial crisis worsened, MasterCard Advisors said in a report on Tuesday.
Overall September apparel sales fell 5.5 per cent from a year ago, with women's apparel down 9.1 per cent. Furniture sales sank 13.3 per cent, the worst decline since 2003, while electronics and appliance sales tumbled 13.8 per cent.
Not one spending category posted positive gains over last year, according to the report by SpendingPulse, the retail data service of MasterCard Advisors.
"The turmoil on Wall Street had an immediate impact on consumer confidence," said Kamalesh Rao, director of economic research for SpendingPulse. "Uncertainty around the financial markets naturally forces people to scale back their own spending."
But consumers wary of Wall Street woes taking a bite out of their wealth could also be curtailing purchases until holiday promotions heat up, he said.
"People will save in the months leading up to the holiday season. So this may be some of that pullback," Rao said.
September sales, which took place during the depth of the US financial crisis, are an indicator of how consumers pressured by higher gas and food prices, falling home values and tight credit conditions will spend during the upcoming holiday season, expected to be the slowest in 17 years.
Sales of men's apparel fell 2.4 per cent, while overall footwear sales were down 1.4 per cent. Speciality apparel sales fell 5.5 per cent. Overall speciality retail, which includes apparel and department stores, fell 7.7 per cent.
Based on a three-month moving average of sales, speciality apparel fell 2.6 per cent, women's apparel fell 4.4 per cent and men's apparel and footwear fell 2.0 per cent and 1.0 per cent, respectively.
A $700bn US government bailout package approved last week failed to quiet investors' concerns about the health of the financial system and the broader economy. A series of bank rescues in Europe over the weekend added to concerns that the problems were quickly spreading.
SpendingPulse results give an early look at the strength of September same-store sales, which retailers such as Target, Wal-Mart Stores, J.C. Penney Co and Kohl's will report this week.
In other categories measured by SpendingPulse, spending on hotels fell 4.9 per cent in the month, as higher fuel prices crimped travel plans and dampened airline ticket sales. E-commerce sales were down 8.4 per cent.
Luxury spending, including high-end department stores, leather goods and high-end restaurants, fell 4.8 per cent, as the rising US dollar curbed spending by foreign tourists.
SpendingPulse data is derived from aggregate sales in the MasterCard US payment network, coupled with estimates on all other payments including cash and cheques.