According to the Commerce Department, retail sales rose only by 0.2% in October, after climbing 0.7% in September.
Link: http://www.census.gov/svsd/www/advtable.html
Economists forecast that this holiday season could be the worst in 5 years, as consumers pull back spending due to declining home prices and rising fuel and food prices. This could be bad news for retailers who obtained a bulk of their revenues in November and December.
An interesting question is whether or not the affluent customers will also cut down spending. on luxury items. Coach has issued warning regarding slowdown in customer traffic and Polo Ralph Lauren has lowered profit forecasts citing a more "conservative view of discretionary spending among U.S. consumers," as reported by the WSJ. Nonetheless, the London-based luxury-goods maker Burberry has boosted its average selling price of its luxury handbags by more than 25%, expecting that affluent shoppers will continue to spend since they are less affected by the economic slowdown.
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