Even in the best of times, it is difficult to grasp the consumer.
The process that gets shoppers to spend their money here instead of there – or simply keep their wallets closed – involves a complicated mix of economics, product development, marketing, chance and psychology.
Since cause and effect cannot be determined precisely, investors and economists often rely on the actual sentiment of consumers.
And the mood is rather mediocre with regard to autumn.
At its last reading, the Conference Board’s consumer confidence index rose to 100.3 last month from 97.8 in June.
Dana Peterson, chief economist at the Conference Board, analyzed the figures at the time as follows: “Although consumers are relatively positive about the labor market, they still seem to be concerned about high prices and interest rates and uncertainty about the future. These things may not improve until next year.”
The consumer confidence score is based on two other indices: the current situation index, which refers to the here and now, and the expectations index, which looks six months into the future.
In general, buyers are much more satisfied with their current situation than with the future.
The expectations index rose to 78.2 in July. Although this is an increase from June (72.8), it is still below the level of 80 that usually signals an impending recession.
Since then, the U.S. unemployment rate has risen to 4.3 percent, the highest since 2021, and the stock market has been on a rollercoaster ride.
As Election Day approaches and Vice President Kamala Harris and former President Donald Trump battle for the presidency, fear is only likely to increase.
Although brands are aware of the broader consumer context, they often focus on things they control.
Justin Picicci, chief financial officer of Ralph Lauren Corp., told analysts on a conference call this month that the company expects the status quo to remain the same with consumers.
“These include caution regarding the global macro and consumer situation, weakness in the wholesale channels in North America and also some additional pressure from product costs, especially in the second half of our fiscal year,” Picicci said.
Ralph Lauren is trying to counteract this with brand strength.
“We’ve developed a sustainable strategy over several years,” the CFO said. “And Ralph has really built the ultimate timeless brand… We’re going to continue to lean on our brand, our really strong brand that brings with it this clear value proposition that consumers know and trust.”
Although the brand remains a constant for Ralph Lauren, a more confident consumer base never hurts.
The Conference Board will next update its purchasing sentiment index for August on Tuesday.
