Economic Update — A Bottom in Sight for Retail?
- Feb 06, 2009
Is it good news when things aren’t getting worse any faster? When it comes to retail sales in the United States and the retail real estate industry that depends on it–both of which have taken terrific beatings lately–maybe so. According to the most recent survey of 40 major U.S. retailers by consultancy TNS Retail Forward, January same-store sales declined 1.4 percent, a bit better than the 1.5 percent decline the company reported in December and down from the 1 percent gain reported in January 2008. “It isn’t an improvement–it would be too soon to expect that–but the rate of decline isn’t getting any worse,” Frank Badillo, senior economist for TNS Retail Forward, told CPN. “At this point in the cycle, that counts as a good thing. If the rate of decline moderates in the months ahead, retail might be able to find a bottom.” As usual, Wal-Mart led the way in sales, as the prospect of Always Low Prices, Always lured not only lower-income households, but even a modicum of affluent shoppers. In December 2007, noted Retail Forward, 15 percent of all households with more than $100,000 in annual income reported visiting a Wal-Mart in the previous four weeks. In December 2008, that figure was 17 percent. Upper-income households may not be going broke all that much, provided they still have that upper income, but the uptick in Wal-Mart shopping among carriage-trade shoppers could reflect a recessionary mentality percolating up the income scale. The Bentonville, Ark.-based retail behemoth posted a 2.1 percent same-store sales increase in January, beating its own estimate slightly. Its rival Target Corp., on the other hand, saw a 3.3 percent drop in same-store sales, which was less than the 5 percent Retail Metrics had predicted. Wal-Mart was one of the gainers today in terms of stock price, up 4.61 percent. Overall, the Dow Jones Industrial Average ended up 1.34 percent, while the S&P 500 was up 1.64 percent and the Nasdaq gained 2.06 percent.