Split buying

Date posted: September 28, 2010

Retailers have had a tough time in the economy overall. We haven’t seen the typical spike in retail sales after a recession. But, as N.C. Cooperative Extension economist Mike Walden says, there is a part of the retail market that is doing better than the rest.

“What we are seeing in the retail market now is almost two markets. We’ve had a good rebound at the high end, so-called luxury products. Part of the reason is because luxury products took a big hit during the recession, but they are coming back. Also because the people who buy those — primarily higher-income households — their unemployment rate has tended to be lower, so they have more buying power.

“But in contrast we have a much weaker retail market that is focusing on maybe the low-to-middle end. Those are the people — the buyer of those products … are the people who are really struggling. They tend to have higher unemployment rates.

“So we are really seeing a two-pronged retail market: high end doing much better; low-middle end, not doing as well. And in some sense that reflects the entire economy.”

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