She pointed to the 14 percent sales increase reported Wednesday by Family Dollar Stores.
So when is the supremacy of Wal-Mart likely to fade?
"I think one of the elements will be when unemployment stabilizes," she said. "The world will shift to discretionary, and some of those discretionary names, we're beginning to see people start to nibble at, whether it's companies like Tiffany-- very discretionary, but they've been beaten down--the apparel retailers like J Crew Group, when their inventories get clean, will begin to see people begin to gravitate back."
That's not going to be tomorrow.
"We think that `09, it's going to be weak throughout the year," she said. "Inventory is still too high in the first quarter; it's coming down significantly in the second quarter, and it will begin to stabilize in the third."
It's not just a bad December that retailers are reporting; it's a bad January, too.
"You're not having a big gift-card season," Telsey said. "That's going to negatively impact January, given that 70 percent of all gift cards had been redeemed in the month of January, typically."
Sales of gift cards are not booked until the cards are redeemed.