NEW YORK — That $3.20 latte at Starbucks and the $300 handbag at Coach may no longer be affordable luxuries. Feeling squeezed by gas prices and weak credit, the nation’s shoppers are increasingly trading down to lower-price stores or cheaper items.
Such changes — which emerged last summer and surfaced in the latest financial results for retailers — could alter dynamics of the holiday shopping season as it officially kicks off Friday.
For some shoppers, it could be as drastic as buying all their clothes at discounters instead of department stores. For others, it could be as subtle as buying a wallet instead of a handbag or one latte per week at a fancy coffee shop and deli coffee on the other days.
The trend could benefit discounters, warehouse clubs and drugstores while hurting department stores and mall-based apparel chains. Even Starbucks Inc. reported its first decline in traffic on record at its U.S. stores.
“People are so cash- and credit-concerned,” said retail consultant Burt Flickinger III, noting that he hasn’t seen “the trading-down” phenomenon since the 1987 stock-market crash resulted in massive job losses and the housing slump in the early 1990s.
The idea of trading down is different from cross-shopping, when shoppers buy kitchenware at Target and status handbags at Neiman Marcus. Shoppers cross-shop to have a more eclectic style but trade down to cheaper stores as a sign of financial stress, say experts.
With all the noise, shoppers still may be resigned to keep to their holiday budgets, which surveys show are not much different from a year ago. Then again, what they plan and what they actually do is another story.
“I don’t have a whole lot of money to spend — with gas and everything, you can’t — but I probably will overspend,” said Kerry Weston of Hollywood, Fla., who was shopping in Burlington, Vt.
