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Number Cruncher

Discount, luxury retailers squeezing the middle Add to ...

What we are looking for

It's the time of year when our thoughts turn to shopping (and how to save money shopping), so we thought we'd take a look at retailers over the past 12 months, particularly of the el cheapo variety.

First, though, a word on retailers that haven't done well - those that cater to the middle class. Job losses have hit the middle class disproportionately hard, while the upper and lower classes have seen their economic situations remain relatively unchanged. As a result, stores that serve the middle-income consumer have felt the squeeze the hardest, while discounters and luxury retailers are flourishing, say Pierre Lapointe and Alex Bellefleur, the strategist/economist team at Brockhouse Cooper.

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U.S. retailers such as Dillard's Inc., Sears Holdings Corp. and Home Depot Inc. are among large retailers that are "stuck in the miserable middle" and have watched revenue shrink by 15 to 20 per cent since 2007, Mr. Lapointe and Mr. Bellefleur said in a recent report.

Discounters, on the other hand, have gained from consumers' increasing value-consciousness. Among the beneficiaries: Dollarama Inc. and Canadian Tire Corp. Ltd.

Mr. Lapointe and Mr. Bellefleur screened for retailers that increased same-store sales and posted positive operating margins over the past 12 months. "These stores would be expected to do well for as long as the situation remains sluggish," they said.

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