Attention bargain hunters! Where do you turn when discretionary spending is guarded? Why not go where the bargains are? Discount department stores have been turning profits for ages by taking meager markups in exchange for rapid inventory turnover. They're only beginning to heat up now that money's too tight to mention.
The reasoning is simple: Prudent shoppers, facing personal budget cuts, find their way to the discount department stores. Meanwhile, the current client base may spend a little less, but they have no other economic options. According to K-Mart
Both companies have also become even more "all-weather" proof by expanding into groceries. Each discounter had already cut its supermarket teeth in the warehouse club business (Wal-Mart with some degree of success at Sam's Club, and K-Mart failing with Pace). The extension into offering a wide array of refrigerated and frozen food products hasn't been smooth, but it is now starting to bear fruit. Wal-Mart, for instance, saw its food sales grow by a staggering 34% during the March quarter.
As I had pointed out in a recent retail take, the state of fiscal fashion begins and often ends at the storefront. So with April's same-store sales figures at full-price department store chains like Nordstrom
So, the fact that the consumer is trying to part with less money doesn't mean that all retailers will suffer. The same is probably true for shareholders of the beneficial discounters.
Have a wonderful summer!
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