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Curious things are happening on America’s Main Street. The fact that the majority of US retailers experienced disappointing sales in October probably says more about Wall Street’s overblown expectations than longer-term trends. Following September’s shopping spree, though, a bit of a breather ahead of the holiday season looks appropriate enough.

More peculiar, however, is the fact that Wal-Mart, along with other discounters, did especially badly. In contrast, mid-market department stores, such as JC Penney, continued to do pretty well. That is hard to square with the idea that consumers are finally starting to tighten their purse strings. Wal-Mart, after all, has tended to gain market share whenever depressed shoppers traded down.

If the retail giant fails to do so this time round, that will partly reflect the awkward timing of its recent efforts to attract more affluent shoppers. Wal-Mart already admits that revamping its stores and pushing slightly pricier items has proved a bit of a distraction. That helps explain its subdued November guidance in comparison with expectations of a rebound at rival discounter Target.

Unfortunately, none of this means other retailers are quite safe yet from the Grinch stealing Christmas this year. For one thing, the widely held belief that lower fuel prices will leave US consumers with more money to spend rests on something of a fallacy.

After all, the average price of crude oil in the year-to-date is still up 20 per cent on last year’s level. If US consumers saved for the holidays the old-fashioned way, by putting money aside, they would have already spent a large chunk of their Christmas budget at the pump. Add to this a cooling housing market, rising interest rates and the effect of stagnant median incomes and it is not outlandish to think that Wal-Mart’s lower-income clientele may only be among the first to feel the pinch.

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