U.S. Census Bureau Q2 economic data shows a monster increase in retail sales profits ($13.3 billion) vs. Q1 ($7.4 billion). That's an increase of 80%! And this is despite a sales volume increase of only 7% vs. the same period ($499.99 billion vs. $487.6 billion).
Of note, however, is the significant decrease in sales versus a year ago (YAGO)- down 6% from $532.8 billion in Q2, 2008. The good news? Despite this decrease, the U.S. retail sector achieved profit growth of 2% ($0.9 billion more than Q2, 2008).
So what does this all mean? It means there is recovery in the retail sector of our country to a degree and a strengthening of brands that have core audiences of loyal consumers. This "Brand Darwinism" allows those brands with strong products and solid marketing plans to raise prices and offset lower dollar volume while increasing profit margins.The next step for these companies is to regain the fringe consumer- those that stop buying due to, say, economic hardship- and convert them to loyal buyers. This will help return sales volume to past dollar figures, while bolstering the bottom line by further increasing the strong profit numbers we are already seeing.
(Data credit: U.S. Census Bureau; Analysis by linechange.blogspot.com)
