Some of the world's biggest brands made headlines this week which, as you'll soon find out, isn't always a positive thing. Toyota's (NYSE:TM) legal problems have taken a turn for the worse, and Wal-Mart's (NYSE:WMT) sales are in a slight rut. On the bright side, Apple's (Nasdaq:AAPL) iPad exists – although it's still unclear what it actually does. But fear not – many other retailers also seem to be doing quite well. (What people buy and where they shop can provide valuable information about the economy. Find out more in Using Consumer Spending As A Market Indicator.)
In Pictures: Top 5 Reasons Why People Go Bankrupt

Toyota: Moving Forward (Insert Joke Here)
Toyota's troubles aren't over just yet. Last week, the National Highway Traffic Safety Administration revealed its plans to fine the Japanese automaker $16.4 million… yes, $16.4 million to a company that sold almost 2.5 million cars last year alone. But this lawsuit may just be the first in a long string, as emails and internal documents were released last week that stated Toyota executives delayed and debated the release of information pertaining to defaults in many of its models, which included sticking gas pedals and faulty floor mats. (To learn more, read Recall Recoil: Will Toyota Recover?)

This situation practically mimics the hardships faced by Ford Motors in the 1970s and '80s. The Ford Pinto's safety tests were highly suspect, as the bumpers of the cars were known to puncture the cars' fuel tanks, if hit at speeds over 30 mph. Ford's secret safety testing facility was supposedly aware of this issue but gave the car the green light anyway. The reasoning? The company believed it was more fiscally reasonable to pay off lawsuit monies than it was to recall and repair the 1.5 million Pintos and 300,000 Mercury Bobcats.

Unfortunately, the defects resulted in multiple deaths caused by fires, numerous lawsuits and eventual recalls. (Henry Ford made his dream of bringing the automobile to the masses a reality. Find out more in Industry Mogul And Industrial Innovator.)

Always Low Prices … Sometimes
Despite being known as the premier discount retailer, Wal-Mart's sales have slowed in recent months. The chain believes this is due to an overall decrease in electronics and food prices, and in return will be lowering prices on over 10,000 popular items. This action is being made in the hope of bringing middle-class shoppers back through its doors, as its competitors have been able to match (if not beat) Wal-Mart's prices on many items lately.

The price cuts will affect 3,700 U.S. stores, and Wal-Mart says this may just be the first wave of reductions. (We look at a retailer's inventory turnaround times, its receivables as well as its collection period, in Measuring Company Efficiency.)

Buy Low…
The other side of that coin is that the retail industry in general has jumped for March, 2010. Many retailers saw a double-digit increase in sales compared to last year's numbers, which could predict that consumers are ready to return to the aisles. Retail sales jumped ahead of analyst expectations, climbing by more than 9% while the street expected a move of only 6.3%. This trend in consumer spending has been ruling the retail environment over the past months, yet such a massive year-over-year jump was hard to anticipate. Department stores were among the best performers, with an average revenue jump of 12.3%.

Although this marks the fourth consecutive month of growth for the retail industry, investors are still weary and consumers are still gun shy when it comes to high-end and high-priced items, which could contribute to the summer lows we experience year after year.

Getting the Jobs Done
Apple's latest product, the iPad, was released on April 3, and its reception was more than warm. Over 300,000 iPad units were sold on launch day – a tremendous success, considering that the tablet/ebook reader/application magnet was verbally berated in the mainstream media based on its pun-friendly name and ambiguous functionality. In addition to the number of physical units sold, Apple says that 250,000 ebooks and over 1 million apps were also downloaded on launch day.

In comparison, Apple's previous major release, the iPhone, came out almost three years ago. At launch, it sold 270,000 units. (For related reading, see The Best Time To Buy An iPad.)

Wrapping Up
The issues Toyota and other car manufacturers are facing are not easing consumers' minds about high-end purchases. But this may be one of the contributing factors to the recent bump in low- and middle-cost retail purchases. In short, people still have a certain amount of disposable income, and if they're not going to buy $20,000 runaway cars, they have all the more freedom to purchase smaller personal items.

(If you're still feeling uninformed, check out last week's business highlights in Water Cooler Finance: Auto Hope, Bubbling Oil and Obamanomics.)

Related Articles
  1. Entrepreneurship

    How an Internet Sales Tax Will Affect Your Small Business

    Learn about how the Marketplace Fairness Act may impact small business owners should it pass in the House and what the act requires from business owners.
  2. Savings

    Craft Beer Clubs – Bargain or Not?

    If you're an aficionado of artisanal brews (or would like to be), a beer club can be a palate-pleasing, albeit pricey, way to expand your hops horizon.
  3. Stock Analysis

    When Will Dick's Sporting Goods Bounce Back? (DKS)

    Is DKS a bargain here?
  4. Stock Analysis

    Has Urban Outfitters Lost its Way? (URBN)

    Urban Outfitters just made a bold move. Will it pay off?
  5. Stock Analysis

    Is Walmart's Rally Sustainable? (WMT)

    Walmart is enjoying a short-term rally. Is it sustainable? Is Amazon still a better bet?
  6. Savings

    Are Wine Clubs Worth It?

    Some points to consider, before committing to a membership for yourself – or as a gift. The right club can also help you save money over the holidays.
  7. Stock Analysis

    Kohl's: Should You Stock Up or Sell? (KSS)

    Many traders are bearish on Kohl's, but long-term investors might want to take a closer look for this simple reason.
  8. Stock Analysis

    GoPro's Stock: Can it Fall Much Further? (GPRO)

    As a company that primarily sells discretionary products, GoPro and its potential falls right in line with consumer trends. Is that good or bad?
  9. Stock Analysis

    How Macy's Will Refresh its Brand

    Macy's is heading in the wrong direction, but what's the potential for a turnaround?
  10. Stock Analysis

    Nordstrom: Is it a Buy or Should You Avoid Now?

    Consumer trends are going to change over the next year or so. How will this impact Nordstrom? Will it adjust in time?
  1. Where can you buy NetSpend reload packs?

    You can only purchase NetSpend reload packs at Giant Eagle, Albertsons, Roundy's and Pathmark supermarkets. NetSpend cards ... Read Full Answer >>
  2. What does marginal utility tell us about consumer choice?

    In microeconomics, utility represents a way to relate the amount of goods consumed to the amount of happiness or satisfaction ... Read Full Answer >>
  3. What are some common ways product differentiation is achieved?

    There are many ways to achieve product differentiation, some more common than others. Horizontal Differentiation Horizontal ... Read Full Answer >>
  4. What role does the OEM (original equipment manufacturer) play in the finished product?

    Original equipment manufacturers (OEMs) do not typically play much of direct role in determining the finished product. However, ... Read Full Answer >>
  5. What is the difference between an OEM (original equipment manufacturer) and a VAR ...

    An original equipment manufacturer (OEM) is a company that manufactures a basic product or a component product, such as a ... Read Full Answer >>
  6. Is the retail sector also affected by seasonal factors?

    Generally speaking, the retail sector is highly seasonal. Almost invariably, sales in the retail sector are highest in the ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  2. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  3. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  4. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  5. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  6. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
Trading Center