NEW YORK — American consumers went into hiding in September, leaving retailers with dismal sales and an uncertain future well beyond the holiday season as the fallout from the financial meltdown pushes spending even lower.
As retailers reported their monthly sales figures Wednesday, even discounters weren't immune to shoppers' mounting worries about their financial security.
"Discretionary spending has come to a trickle," said Ken Perkins, president of research company Retail Metrics Inc. "Consumers are the most worried I have seen since at least the 1991 recession. There are so many factors laying on their psyche."
Wal-Mart Stores Inc., the world's largest retailer, said sales of discretionary items were weak as it posted solid results that were nevertheless a bit below expectations. Target Corp. fared far worse, reporting a bigger-than-expected drop. It said it was cutting its profit outlook because it expected problems with its credit card business to last through the year as customers have trouble making payments.
Luxury stores such as Neiman Marcus Inc. and Saks Inc. suffered sharp drops as well-heeled shoppers held off on buying $600 stiletto-heeled shoes and other luxuries. Many mall-based apparel stores and department stores including J.C. Penney Co. and American Eagle Outfitters Inc. find themselves mired in a deep sales slump.
With no clear spending recovery in sight, retailers are navigating in the dark about how much to cut their spring orders and store expansions to address the dramatic changes in consumer behavior that are expected to persist at least into next year.
"We rarely eat out, and even groceries have become a big-ticket item," said Cincinnati resident Victoria Gentry, 41, a single mother of a 15-year-old daughter, who now worries about her job at a bank's merchant-service division. "No more payday pizzas now."
Before the financial meltdown began last month, customers had already been switching to lower-price brands and stores, cutting back on essentials and making other changes such as mending their clothes instead of buying new ones.
"Weakness in consumer spending is a significant drag on overall economic activity," said Scott Hoyt, senior director of consumer economics at Economy.com, who now predicts declines in consumer spending, adjusted for inflation, through the first quarter of 2009. "We are on track for something longer and deeper than either of the previous recessions."
