SHOPPING IN WAR TIME.  As the saying goes, “When the going gets tough, the tough go shopping.”  But does that happen in war time, too?

The evidence of the impact of the current Gulf conflict on American shopping habits is mixed.  Some stores—especially upscale department stores—appear to have seen some declines in sales.  It is difficult, however, to separate seasonal and economic effects from the immediate effects of war.  One popular standard of comparison, for example, is “same store” sales compared to last year.  That is, are sales up or down compared to the same time last year in stores that already existed then?  The economy was sluggish last year at this time, too, but sales tend to go up and down a little.  Comparing sales to a month earlier also does not provide a complete picture since the time of the year affects overall consumer spending and particularly spending in certain categories.  For example, USA Today reports that outdoor merchants in some areas have benefited from good weather.  Another complicating factor is that current low interest rates have encouraged a lot of consumers to buy home homes, representing a serious drain on their economic resources.

Sales in certain product categories appear to be especially strongly affected by war and terrorism.  It is probably not surprising that sales of bottled water, American flags, canned food, canned fuel, and cigarettes have increased dramatically as people fear possible terrorism on the home front.  Gun sales are also reported to be way up.  One New York gun store reports 50-60% increases in gun sales.

Pizza parlors—especially those which deliver—obviously see a dramatic increase in sales due to the so-called “CNN Effect.”  During the first Gulf conflict, deliverers who were struggling to keep up with orders reported invariably observing whole families “glued” to the television set as they arrived.  Sales at many restaurants appear to be up, but take-out orders are reported to account for an increasing proportion of sales.

Certain sales patterns were observed immediately after September 11.  Nationwide, scanner data showed that sales were down 10% from a year on the day of the attack, with sales down 30-40% in New York and Northern Virginia.  Given the logistical difficulties of going shopping in those areas at the time, this latter decline is not surprising.  Nationwide, part of the decline also appeared to be due to the economic decline that had begun.  Nevertheless, large declines in the sales of nail polish and facial cosmetics were observed.  One might imagine that more women who were watching more television might take this opportunity to do their nails, but the low mood associated with the situation might have dampened such urges.  Also, it should be noted that actual consumption and sales of certain products do not correlate perfectly.  Consumers tend to maintain “inventories” of certain products.  Thus, chances are, for example, that current sales of snack foods greatly underestimate consumption.  Certain family members might be especially concerned at the moment about the fate of their Lean Pockets^®.

What drives people to shop or not shop in times of crisis?  Obviously, there is an issue of convenience and available time.  If people choose to watch the news rather than going shopping, a number of purchases will be delayed if not foregone.  It is also likely that guilt will stop some people from shopping.  It may seem frivolous or selfish to go shopping for certain luxury items when our troops are deployed fighting.  On the other hand, shopping can also be a distraction.  People who experience “CNN fatigue” might find shopping a welcome distraction.  This may be especially the case for parents who would like to relieve their children’s worries.  Some book stores, for example, have reported increased sales.  Part of these sales involve educational material on various aspects of the situation, but turnout at “story time” has also been reported up.

What are the medium to long term prospects for retail sales?  USA Today reports on a Gallup poll in which 91% of consumers surveyed said that the war would not prevent them from making large purchases.  However, consumer self-reports of intentions are reliable indicators of actual behavior.  Individuals may very well feel uncomfortable or be distracted and may put off purchases by one month.  This would have a dramatic impact on reported sales in the short run.

War significantly impacts the income of some households.  Reservists called in may face a significant decline in income as military pay is less than their civilian pay.  Family costs may also go up.  With one parent gone, there may be extra costs for child care, and long distance phone calls—if available—can quickly add up.

One issue, aside from spending and time available, is possible fear of terrorism.  After September 11, many people were reported to be anxious about being out in public places.  At this time, many consumers may worry about the safety of being in public places, making a shopping mall a less attractive destination.  This problem may be compounded by the historical tendency of rumors to surface during war.  If rumors of impending terrorist attacks spread, this may discourage many people from going shopping even if these consumers know what, rationally speaking, chances of anything actually happening to them are small.

FOR ADDITIONAL INFORMATION:

Bruce Horovitz and Lorrie Grant, "Despite War, Americans Go Shopping Over Weekend," USA Today, March 24, 2003.

Randy Tucker, "Longer War May Affect Retail Sales," Cincinnati Enquirer, March 25, 2003.

Sally Jackson, "Shoppers Load Up on Bread and Guns," The Australian, September 20, 2001.

Ann Zimmerman and Emily Nelson, "Alarmed Americans Stock Up on Guns, Water, Flags, and TVs," Ottawa Citizen, September 19, 2001.

Louis Uchitelle, "A Nation Challenged:  Sales Drop and Spending Waits as Uncertain Economy Grips," New York Times, September 30, 2001 (late edition).