Analysts believe that this is an indication that high-end retail is on the recovery.  Ironically, Walmart posted the smallest sales gain at only 1%.  It appears that shoppers who tried dollar stores during the initial scare were presently surprised and are deciding to stay loyal to the low cost retailer.  Dollar General’s research found that 97% of new customers plan to continue shopping there if the economic conditions change.  Additionally their profits have risen 6.5%.  In keeping with the momentum, Dollar General is in the process of revamping their store layout to roll out to 1,500 stores and improving their product mix.

Walgreens, like most strategic-minded retailers, spent the beginning of this year making customer-centric adjustments to account for the change in shopping behaviors and spending capacity. Their Rewiring for Growth and Customer Centric Retailing Programs were part of that initiative which sought to reduce costs, streamline category assortments and expand the most popular product categories. However, it appears that the markdowns taken in implementing these programs cost the company in their retail operations.  Pharmacy growth and generic drugs buffered the quarterly sales.

What does this mean about strategic adjustments in this economy? Are retailers better served to wait it out and hold on to their traditional positioning like Abercrombie & Fitch? Or should they take the hit and shift gears?  Your answer likely depends on whether you believe that current shopper behavior changes are temporary or permanent.

The report interviewed Emily Shanks of Barclays Capital on retail.  Click here to read her analysis.