With disappointing holiday sales, retailers ended 2015 on a sour note. So far 2016 hasn't looked much better with U.S. markets marking the worst start of a year ever.
Despite the questions swirling about global economic contagion, retail CEOs are quite optimistic — even if no one else is.
Since consumer spending accounts for more than two-thirds of U.S. economic activity, it is worthwhile to listen to what the country's retail leaders are saying in an attempt to gauge the pulse of the nation's consumers.
Matthew Shay, CEO of industry trade group the National Retail Federation, said he expects retail's contribution to economic growth is solid.
Several economists met with NRF's board over the past weekend, and Shay said no one was all that pessimistic.
"I think there was a lot more optimism and enthusiasm about the opportunities ahead, but there's no question there are still some challenges in the economy that are maybe more at the macro level than are specific to retail," he said.
According to Goldman Sachs' Matthew Fassler, although retail sales and personal consumption have moderated, both are still clearly in positive territory. And consumers will still have a healthy level of growth in their capacity to spend this year.
"We find ourselves in a period where the market is trading a more pronounced macro slowdown than is evident in macro drivers and most recent results," Fassler said. He added that there is a precedent for the industrial economy to contract without a similar move in consumer spending.
"We find ourselves in a period where the market is trading a more pronounced macro slowdown than is evident in macro drivers and most recent results," Fassler said. He added that there is a precedent for the industrial economy to contract without a similar move in consumer spending.
Those in the trenches see a number of factors contributing to changes in consumer shopping patterns.
"Consumers are looking for experiences, whether that's travel, whether that's entertainment," said HSN Inc. CEO Mindy Grossman. "They're looking for differentiated products, things that are going to have meaning. So our perspective on that is you've really got to be differentiated, you really do have to create an experience and you've got to create an emotional connection with the customer if you're going to want her to spend."
Consumers are shopping at smaller, more unusual boutiques, according to Steve Sadove, former Saks CEO and current board member for JCPenney, Ruby Tuesday and the National Retail Federation.
"Sales at businesses with less than $50 million was double the growth rate of the larger companies, so the consumer is actually relatively healthy, but they are buying differently," Sadove said. "The apparel products that are widely available everywhere, that's not what consumers want, they are going for something that's really quite different."
During an interview on "Squawk Box," Macy's CEO Terry Lundgren said the holiday season was difficult for his company as well as others, but he hinted that the onset of colder weather in January has begun to help.
Consumers also are concentrating their spending on automobiles, restaurants and travel, Lundgren said.
"I have seen this movie several times before, and these are cyclical things that do happen and do occur, and that cycle that we are in right now is probably going to last for a bit of time, but not forever."