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Cramer: What the heck is going on in retail?

(Click for video linked to a searchable transcript of this Mad Money segment)

Few groups matter more to investors than retail.

Because the US is a consumer driven nation, pros view the health of this sector as a broader referendum on the entire economy.

And lately retail hasn't been sending very good messages.

On Thursday Best Buy added to the string of recent concerns by reporting disappointing sales during the 9-week holiday shopping season.

Specifically, domestic revenue declined to $9.75 billion from $9.91 billion, while international revenue fell to $1.7 billion from $1.85 billion.

Shares of Best Buy tumbled a whopping 28% by the close.

Conventional wisdom would suggest that the company and the economy as a whole aren't doing as well as bulls might have hoped.

But Cramer doesn't think that's exactly the case. He believes the weak results are a byproduct of something else – well two something elses.

Mark Edward Atkinson | Blend Images | Getty Images

1. A significant number of people now buy online.

Although Internet shopping has been an important trend for quite some time, Jim Cramer believes e-commerce has finally reached a point of inflection.

Largely he thinks the financial crisis and resulting downturn gave birth to an extremely price sensitive and frugal consumer. That is, people want value at bargain basement prices.

And the Internet gives shoppers access to just that -- not only because companies such as Amazon offer good discounts but because services such as Bizrate sweep the web and find the lowest prices at the click of a button

Best Buy is still largely a brick and mortar enterprise.

(It should be noted that Best Buy is actively expanding its online presence with domestic Internet sales generating $1.32 billion in revenue.)

2. Too much euphoria in Best Buy

Cramer also thinks weakness in Best Buy is somewhat company specific. That is, so many analysts turned bullish on Best Buy's turnaround prospects that they got ahead of the turnaround itself. . Best Buy's stock price had more than quadrupled last year.

Hence the disappointing results triggered an overreaction on the downside.

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All told, Cramer thinks the weakness in Best Buy and retail broadly is probably less of a referendum on the economy and more of an illustration that 1) behavior patterns are shifting and 2) the Street became overly euphoric.

Therefore, if you're using the sector broadly to gauge the health of the consumer – well, Cramer isn't sure that's such a good idea anymore.

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