By Jeff Green—Despite some very key indicators that the economy is improving,retailers like Target, Wal-Mart and Sears have reported weak second quarter earnings, or revised their projected Fall numbers down. This is certainly alarming news as we approach the holiday shopping season. But in my mind, the question is whether this is a blip in the radar, or a more alarming trend. In the latest edition of my Retail Rap column, I take a deeper look at some of these economic issues affecting retailers and what it means for retail growth in 2013 in the midst of what is supposed to be a true economic recovery.
What makes the weak second-quarter retail numbers and anemic third-quarter projections particularly counterintuitive is that many/most of the big-picture economic indicators have shown improvement throughout the year. If that’s the case, however, why don’t consumers really seem to be spending? I think this gets at a larger problem, which is that when we talk about economic trends, the metrics we use to measure the ups and downs apply disproportionately to large companies and the wealthiest consumers. The result is that recoveries tend to be focused at the high end of the income scale, and that’s really a fairly small group of people. If the middle class isn’t spending money, that’s going to have a huge impact on retail sales. I think it’s worth asking the question of whether or not this “recovery” might be the new normal.
Check out the full article from my recurring column, Retail Rap, at Chain Store Age.