Two classes of shoppers emerge: spenders, savers

ASSOCIATED PRESS

American shoppers are splitting again: The affluent are finally starting to buy, picking up designer clothes at places such as Nordstrom and Abercrombie and Fitch, while those on the lower economic rungs are still scrimping by, heading to Walmart for the basics.

Recent earnings reports from major retailers suggest that the wealthy, who pulled back their spending the hardest during the financial meltdown last fall, are once again being enticed to open their wallets and going back to higher-end outlets.

“It’s a good sign, but we don’t see the same across the board,” said Richard Hastings, a consumer strategist with Global Hunter Securities LLC.

It’s still a far cry from the era of conspicuous consumption. No matter the tax bracket, people are still focused on value and trying to avoid overspending — whatever that might mean to them.

Luxury chains such as Nordstrom Inc. and Bloomingdale’s, owned by Macy’s Inc., say shoppers are spending again on items such as shoes and dresses, but still shopping for lower prices and classic pieces that get a lot of use.

On the other hand, discounters such as Wal-Mart Stores Inc. are lowering prices even further to coax their less-well-off shoppers to keep spending. And it’s not on anything glamorous. We’re talking basics, such as food and socks.

Think of it as two different groups as the economy recovers — spenders and savers.

Luxury department stores like Nordstrom and Saks are starting to get more traffic. Part of the reason is that they’ve rolled out some merchandise at slightly lower prices, which is helping to keep the affluent from trading down.

“If they do spend, it’s very scrutinized, and it’s very value-driven,” said luxury retail analyst Robert Burke. “And they want items they can wear multiple places.”

Other expensive stores like Abercrombie & Fitch are taking the lesson. The preppy clothing seller said Friday it will offer some lower-priced basics and stock up on denim early next year.

Nordstrom’s third-quarter profit rose as sales improved compared with last year. Of course, last year marked a sharp drop in luxury spending as the financial crisis deepened.

Meanwhile, middle-class and poorer shoppers are still clutching their wallets and focusing on basics, even as they start to venture out to stores more.

Kohl’s, a chain of midrange department stores, said more customers came into its stores in the third quarter and made more purchases, but they’re still limiting their spending.

Its shoppers are on a mission for a set list of items and not straying, CEO Kevin Mansell said.

“We’re not able to convince them to buy that extra thing,” he told The Associated Press.

Faced with slower sales, J.C. Penney Co. has cut its inventory so it doesn’t have to rely on as much discounting. Sales were still weak as its shoppers continued to worry about job security and tight credit.