A new shopping mantra

With the economy taking a downturn, retailers and shoppers are both rethinking what they need to do and how they need to live their lives. Shoppers are wondering if it really is all that important to have that pricey pair of shoes and retailers who are closely watching the trends will be able to make it work. Shoppers are turning to department stores such as Kohl's and JCPenney which have clearance racks and away from specialty stores such as Chico's.

Most customers are making decisive choices about where to shop based primarily on price and discounters and wholesalers such as Wal-Mart and Costco are the ones who are benefiting from this recent phenomenon. According to Howard Davidowitz, the head of a retail consulting firm based in New York, "We're seeing the consumer far more budget conscious and definitely trading down."

It's not all good for the discounters though, as they are getting more new traffic, but regular customers are also cutting back on spending and have reduced their spending. Wal-Mart has seen a boost in sales, but Target has not been able to win customers over as they have usually attracted impulse shoppers, which consumers are cutting down on buying, where as Wal-Mart attracts consumers looking for all the basics, which consumers are still buying.

Warehouse clubs such as Costco and Sam's Club, the Wal-Mart sibling, are seeing sales shoot up. And there's evidence more upper-income customers are heading in for gas and to buy brand-name detergent and groceries in bulk.

"It's a phenomenal shift. You see people who you never expected to be shopping at those stores," said Britt Beemer, founder of Charleston, S.C.-based America's Research Group consumer research firm. In a recent survey of 800 shoppers, he found many high-income households heading for warehouse clubs.

"Ten percent of those shoppers at the warehouse clubs had (household) incomes of over $100,000," Beemer said, double the number from a year ago. "That's not what you'd think is the typical warehouse club shopper."