Uncertainty Takes Rising Toll on Buyers and Sellers: Pro
Rising energy prices and torpid U.S. economic growth are taking an increasing toll on cash-strapped consumers and retailers faced with dwindling profit margins, an industry representative told CNBC on Monday.
John Eichberger, director of motor fuels for the National Association of Convenience Stores, told CNBC’s “Squawk Box” that consumer confidence is being negatively affected by a host of factors.
“What we’re seeing is across the country … is in-store sales are down this year compared to last year,” Eichberger said. “When you combine that with high prices and lower retail margins … retailers are definitely feeling the pinch and consumers are not having a good time.”
According to Eichberger, convenience store owners derive much of their income from purchases that consumers make at gas stations not related to gasoline. High gas prices — hovering just shy of $4 a gallon nationally — are undermining the ability of convenience store retailers to sell other products to cash-strapped consumers, he said.
Rising unrest in the Middle East threatens to send oil prices on a renewed tear. That could prompt consumers to rein in their spending even further, which could worsen the outlook for retailers.
“We do make a lot more money on the in-store items” and gas prices help consumers determine where they spend, and how much, Eichberger said. “That price has to be competitive, and unfortunately that competition results in a price that doesn’t always provide the retailer with any positive return.”
Although he stopped short of saying the U.S. economy was close to a full-blown recession, he noted that sales “have slowed down a little bit because margins are so much lower and consumers aren’t spending much.”
—By CNBC.com’s Javier E. David