Wal-Mart Bets on Reduced Prices; European Retail Sales Decline Most in Nine Months

Inquiring minds are reading European Retail Sales Decline Most in Nine Months.

European retail sales declined the most in nine months in February as rising unemployment prompted consumers to cut back spending.

Sales in the 16-nation euro region fell 0.6 percent from January, when they decreased 0.2 percent, the European Union�s statistics office in Luxembourg said today. That�s the biggest drop since May 2009. Economists forecast sales to remain unchanged, the median of 15 estimates in a Bloomberg News survey showed. From the year-earlier month, February retail sales declined 1.1 percent.

In the 27-nation EU, retail sales remained unchanged from January while declining 0.7 percent from a year earlier. Sales declined in 13 EU member states and increased in seven, today�s report showed. Portugal had the biggest drop, with a 3.4 percent decline.

Wal-Mart Cuts Prices On Thousands Of Items

Meanwhile, back in the US Wal-Mart Bets on Reduction in Prices

Wal-Mart Stores Inc. is cutting prices on thousands of products in an aggressive campaign to reinforce its reputation as a discount leader, as the company seeks to reverse months of slowing U.S. sales.



The company says it believes that, despite increasing consumer optimism, many Americans will continue to struggle in the months ahead. So, it is cutting prices this week on roughly 10,000 items, mostly food and other staples. The company declined to specify the sizes of the cuts.

Mr. Quinn said Wal-Mart expects to expand the number of price cuts in coming months with help from suppliers. Wal-Mart is encouraging them to reduce what they charge the chain in exchange for having it spotlight their products as part of its price "rollback."

Jack Brown, chief executive of Stater Bros. Markets, a small California grocery chain, said he believes consumers are looking to gravitate away from discounters like Wal-Mart and back to traditional supermarkets closer to their homes. He said signs of better economic times have led to an increase in store visits to Stater Bros., and shoppers are spending 25% more per transaction.

Reader Anecdotes

BlackSwan writes ...

Walmart is selling 5 lbs of Florida grapefruit for $2.50. That's less than I was paying at Florida roadside stands. Their fruits and vegetables, which are actually from the USA, are selling for far less than they are at our other supermarkets. Bananas, which are not from the USA, are selling for $.05 a lb less than Costco. Walmart's meat dept, which used to sell garbage brands, is now selling top quality lunch meats at $2 to $3 less per lb than they are selling at the other supermarkets in town. Their baked goods have also gone from garbage to quality, and they are under pricing their competitors by 15%. I feel I no longer have to go in there wearing a disguise.

TinHat writes ...

In my little corner of the world, the Salvation Army clothing store on half price day was absolutely mobbed. Parking lot overflowing with expensive new SUV's.

Bikegirl writes ...

I own a small accessory store in an affluent suburb of Boston with a very reasonable price point($5-$45). My customer base has doubled in the past year yet business is off over 50% from a year ago.

I also do trunk shows at colleges and yesterday's show at a well known school I expected to do about half of last fall's sales ($525, 7 hr day). I only sold $33, ditto for a couple of other shows. People are not spending, period.

Half my business is 8-18 yr old, and parents are clearly not handing out the $10's and $20's. Other local retailers report same situation. And this is in a town that has merrily skipped along during this 'recession'.

Like my mother says, people need to eat everyday, they don't need a pocketbook every day. I'm closing my location and taking a small corner of a local coop for a fraction of the overhead. It does not make sense to stay where I am. The mainstream media spin on the economy is disturbing in it's blatant distortion of the facts.

Endzone writes ...

On the SW side of Ft. Worth over the Easter weekend there was an explosion of shoppers out that Easter weekend. On Hulen Street there were platoons of cars that were 50 cars long. The exit to Hulen Street off of I-20 was backed all the way out to the interstate. This was on Friday of Easter weekend. I didn't go anywhere near that place on Saturday. A friend of mine met me for lunch at a place off of Hulen Street, and it took him an extra 15 minutes to get there. He said he had never seen anything like it all the years he has lived in the area.

I'm not saying this is a sign that consumer spending is back. I'm saying that there was some kind of pent up demand that seemed to explode over the Easter weekend. Of course this SW side of Ft. Worth is probably the most affluent in all the city. Apartment rents are still down in this part of the city.

Jean writes ...

I avoid Wal-Mart like the plague, for philosophical reasons, along with the fact that I really find going in and shopping there emotionally oppressive. I still take pleasure out of doing my shopping in a place I actually enjoy being, dealing with people I enjoy.

But for overall expenditures, I am not convinced that I spent 10-15% more than I would if I shopped Wal-Mart. I am fortunate to have three separate independent grocers within a 3 mile radius of home, two within one mile. The vast majority of the merchandise I buy will be "on sale" at least every few months, including the good quality store brand items. I don't know if I would, in fact, save money by shopping Wal-Mart for food, but I'm really not convinced I would. There are very significant savings to buying on sale and stocking up as Mish does.

While some niche stores may be doing better, others clearly are not. Overall results are very spotty and highly distorted because they are based on same store sales, not actual sale tax revenues.

For more on that line of thinking, please see MarketWatch Says "U.S. Consumers Are Back", Mish Says "Show Me The Money".

Wal-Mart is not slashing prices out of the goodness of their hearts, nor do sales tax revenues support the widely held belief that retail sales are rising.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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