Ironically good, same-store sales at Wal-Mart were down

That massive retail business, Wal-Mart, has reported its same store sales in the fourth-quarter declined 1.6%.  This compares to a fourth quarter increase in consumer-spending of 2%.

Analysis: Wal-Mart has bucked the retail trend since the start of the recession and continually reported numbers that bested its rivals.  However, because of the Company’s discount image, many consumers who are not regular Wal-Mart shoppers gravitated to the store as fears of a deep recession increased.  In effect, they were substituting Wal-Mart’s wares for what, and where, they used to shop.

So my guess is that as the consumer feels better about herself, she is returning to the retailers that were previously preferred to Wal-Mart.  We can confirm this by getting a little bit more data.  Lo and behold, both Macy’s and Nordstrom’s, two higher-end retailers both reported same store growth of 3.4% and 14%, respectively.  While Target’s sales increased a meager 0.5%.

These numbers strongly suggest that a portion of the U.S. consumer market, most likely the middle to upper-middle class, is feeling better about the economy.  In fact, Wal-Mart’s bad news, ironically, is actually good news for the U.S. economy.

Importance grade: 6-7; if it turns out that shoppers continue to trade their shopping up to more expensive retailers then this likely presages an improvement in consumer confidence.  Obviously that is a good thing, yet confirmation of that fact awaits more data.  In my opinion, this is the first piece of good consumer news in quite awhile.

Jason