Western retailers rely on luxury or budget sales

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.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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