Despite the problems in the housing market and the weakness of the US dollar against foreign currencies, retail sales in the US continue to be vigorous, especially in the lower end of the marketplace. The Financial Times web site is reporting that Wal-Mart, the largest retail outlet in the world, saw an increase in sales of 2.6% in February, well above the company’s own forecasts, and more than double the prediction of Wall Street analysts.
One of Wal-Mart’s closest rivals, Target also saw increased sales in February, though at a much lower rate — less than 1%. Other discount retail outlets continue to beat market expectations as well. Family Dollar posted earnings well above market predictions, with a 1.5% increase in February sales.
Economists suggest that the sluggish economy may actually be good for lower-priced retailers such as Wal-Mart. And while this alone is not exactly cause for celebration on Wall Street, it is a sign that the US economy may be more resilient than the TV pundits would have us believe.
But while the discount outlets continue to be profitable, some high-end specialty stores are seeing a slowdown in sales. Saks Fifth Avenue and Neiman Marcus are among the luxury department store brands showing flat sales so far in 2008, and Nordstrom has reported its third consecutive month of lower-than-expected sales figures.
This suggests that as the economy has become sluggish, consumers are becoming increasingly price conscious in their purchasing decisions. The low and medium segments of the retail marketplace seems to be the most profitable at the moment, but even some high-end luxury stores are thriving.
Online sales, for example, continue to be brisk in many areas, with companies such as Overstock.com beating market expectations so far in 2008. Expensive items, such as diamonds and jewelry also continued to sell briskly, though many retailers have cut prices to appeal to bargain hungry shoppers.
Times of recession often cause consumers to hold onto their money, and avoid spending any more than necessary on retail items. But that doesn’t mean that Americans are only buying necessities right now. Wal-Mart is reporting that sales in their entertainment division have been better than expected in 2008. The company has also seen gains in their health and grocery departments.
While many are convinced that the US is now in the midst of a recession, there is also reason to be optimistic; the restaurant and entertainment industries continue to be profitable, and even box office receipts at cinemas and theaters are up significantly over the same quarter last year. These figures suggest that the US economy may rebound much quicker than some “gloom and doom” analyst have predicted.
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