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Western retailers rely on luxury or budget sales

Consumer demand, Economic growth, Financial Events
By Paul Hodges on 15-Jun-2010

EU retailJun10.pngConsumer spending, particularly in the developed economies, is critical to the chemical industry. And there is increasing evidence that a two-tier pattern is developing:

• Wealthier consumers are maintaining their spend, helped by lower interest costs on mortgages and recent stock market gains
• Lower and middle-income consumers remain under pressure, as they are more likely to be unemployed and to rent their home

Thus luxury retailers, and budget stores, are both seeing higher volumes of trade. For example, in the USA last month, Neiman Marcus saw sales up 8%, whilst Costco was up 5%.

Overall, of course, this means retail sales remain under pressure. As the above chart shows, EU volumes were down 1.2% in April. And in the US (which reports its data faster), they were down a similar amount in May.