Middle Tennessee consumers, wracked with soaring grocery bills and fuel costs, are cutting back on spending any way they can, as area retailers continued to report sluggish growth in sales.
Consumers spent less at the nation's retailers in June, with sales rising just 0.1 percent over the previous month, and 3 percent compared with the prior year, according to figures released by the U.S. Department of Commerce Tuesday.
Analysts said instead of spending tax rebate checks on clothing or for the home, consumers spent them on food and gas.
Affected most by declining sales are furniture and home furnishing stores, automobile and parts dealers and building material and garden equipment dealers, according to the U.S. Commerce Department. Analysts chalk that up to sluggish home sales.
Nashville-area store owner Tim Sanders of Sanders Furniture said sales declined by 12 percent in June, compared with a year ago. Consumers at his store are buying just the bare basics — such as a simple bed frame, he said, watching over a storefront filled with furniture but not customers. Sanders says he and his brother have had to "get aggressive" as sales started to lag.
"I don't see a bottom yet," said David Penn, an economist at Middle Tennessee State University. "We're not buying more food, we're simply paying more for the same amount of food. We're going to have an extended period of pinch."
Emanuel Fox, 28, an assistant manager at a Nashville Jack in the Box, said he's tried to cut down his budget by shopping at a thrift store and not frequenting bars as much as he used to. Most of his money went toward bills and food last month, he said, adding that his grocery bill alone was $180 in June — double what he paid a year ago.
The impact is even felt at stores catering to upscale consumers, such as Cool Springs' Norwalk The Furniture Idea, where customized sofas start at an average of $1,500. Sales have declined slightly, said owner and manager Lisa Jones, who said she is happy with the figures considering the economic circumstances.
"I do think the fears of the economy and maybe the news of a troubled economy make people think a little bit more about big purchases," Jones said.
Discounters benefitThe June sales growth in the general merchandise category is being propped up by wholesale and discount stores, while department stores continue to struggle, according to the International Council of Shopping Centers.
"That (discount and wholesale) segment has really benefited from the weakness in the economy where you saw consumers shifting toward the value retailers," said Michael P. Niemira, the New York-based group's chief economist and director of research.
For example, Memphis-based discount retailer Fred's Inc. saw June sales at its stores opened at least a year soared 6.5 percent, as consumers spent more on basic and consumable products. Last year, June same-store sales at Fred's were up only 1.5 percent.
By contrast, sales at Man of Fashion at Hickory Hollow Mall have dropped by about
5 percent as consumers are shopping at malls closer to their homes because of higher gas prices, said general manager Rodney Wimley. Wimley said he plans to hold customer appreciation nights to keep business strong.
But customers like Tiffany Greene, 30, are sticking to shopping at discount stores. Greene, who takes care of children for a living, said she already spent $100 at Wal-Mart on clothes for her son and more than $60 at Dollar General for household goods.
"It's cheaper," Greene said.
Forever 21 will open bigger store at Opry Mills
