Rebate Checks Boost Retail, But How Long Can It Last? - Holiday Central

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It's a make-it or break it time for retailers. The holiday selling season is always a critical time for retailers, but this year this may be even more true. With several retailers already falling victim to a drop in consumer spending, and filing for bankruptcy, retailers will be navigating through some tricky waters. Consumers are strapped for cash due to high energy and food prices, and unemployment is rising. The recent credit crunch has made it more challenging for retailers and consumers to borrow.

This blog will look at the winners and losers in the retail space. Who has the right strategy to capture consumer dollars? It also will look for trends in consumer spending and how that will impact the economy.

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Jun.05

2:35 PM ET

Thursday, 5 Jun 2008

Rebate Checks Boost Retail, But How Long Can It Last?

Posted By:Margaret Brennan

Topics:Media | Consumers | Retail Sales

Sectors:Personal and Household Goods | Retail

How long can a slow economy mean good times at Wal-Mart?

The company is betting that the traffic boost from rebate checks will carry into June and that grocery sales will still be strong in the month ahead. That’s why they’re forecasting sales up between 2-4%. Costco [COST Loading... () ], BJs [BJ Loading... () ] and value-oriented stores all did well this May. Consumers still buy cheap basics during a downturn and the sales results are also boosted by gas and food price inflation.

Anything truly discretionary is weak right now. That’s why Target [TGT Loading... () ] - which is dependent on apparel and home goods products (read: discretionary) - is forecasting that June sales will be flat to down 2%. That’s also why the department stores and specialty shops slumped in May

Here’s what I’m trying to figure out: Why did low-cost clothing stores like Aeropostale [ARO Loading... () ]and Children’s Place [PLCE Loading... () ] fare well while low-cost department stores like JC Penney’s and Kohl’s saw a dropoff in purchases? Is it simply that parents don’t cut back on their kids but they cut back on themselves? Or is this simply the result of a purchasing pattern that has teens/kids refreshing their wardrobes regularly while women don’t do it as much?

What do you think?

Anyhow, I’m on my way down to Bentonville, Arkansas to Wal-Mart’s [WMT Loading... () ] annual shareholders meeting. I’ll keep you posted on any big news out of the world’s biggest retailer.

Apparently investors, press and workers are all in store to hear Carrie Underwood and Keith Urban perform tonight. The rumor is that Miley Cyrus and possibly Journey will be the surprise performers during the meeting tomorrow...stay tuned.

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