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I read an interesting article by Greg Farrell in New York and James Politi in Washington on www.FT.com about the divergence of success between luxury retailers like Tiffany’s and Neiman Marcus and mass-market retailers like WalMart and Zales.
The high-end retailers are seeing an upsurge in growth and revenue at a time when the mass-market stores are headed in the opposite direction. For example, according to the article “On Friday, Tiffany, the luxury jeweler retailer, reported a 9 per cent increase in sales for the second quarter of 2010 over the comparable period a year ago.
By contrast, Zale’s, a mass- market chain of jewelry stores, has seen its 2010 sales lag behind its comparable figures for 2009.
Neiman Marcus, the luxury department store chain, reported a 7.6 per cent jump in revenues for the quarter ended July 31. Earlier this month, Walmart reported that same-store sales for the second-quarter of 2010 had declined from the previous year’s levels.”
What are we to come away with from this data? In my opinion, I think this is a negative indicator for the coming near-term economic climate. Most likely, these figures are tied to the woeful unemployment picture. Even the vaunted Walmart is hurting? The economy will be lead higher by the middle of the country. Call it Main Street. Until that sector of the population is out spending again with dollars earned from a job (not a government program) the economy is going to continue to be mired in this ditch. The rich will still buy diamonds in a good economy and apparently buy them when it is bad. The bottom line is not focus on the health of the lower end of the socio-economic spectrum for the barometer, not the top.
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