Thursday, August 07, 2003

The new retail sales data out today from Bank of Tokyo-Mitsubishi puts an interesting spin on the deflation story. While retail sales overall are up nicely in July year-over-year (y-o-y), the biggest winners are the big-time discounters who make their money off of high volume and low prices.

Department store sales rose just 1.5% y-o-y while discounters went up 4.3% and wholesale clubs a big 5.9%. Interestingly, the biggest gainers in the discounters category were two dollar stores: Dollar General and Family Dollar, both up 4.9% y-o-y. Wal-Mart was up 4.5% and Target stores up 4.3%.

Over in department store land, things are not so rosy. Sears hasn't seen a positive number since 2001, Federated Stores (Bloomingdale's and Macy's) haven't seen sales growth y-o-y since October 2002 and Marshall Fields & Mervyns (both owned by Target) haven't had a positive month since February 2002. Two big department stores -- May Co. (first time since April '02) and JCPenney, however, seem to have their noses above water for now.

"And a dollar store shall lead them."

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