Cash-Strapped Americans Are An Ominous Threat To Retailers

Low-income and middle class retailers including Wal-Mart, JCPenney, Target, Macy's, and Family Dollar have reported disappointing earnings this year.

Executives at these retailers say that Americans are increasingly unwilling to spend money on discretionary items, despite modest gains in the job market.

"Low-end and middle-income retailers are still suffering because people are buying so close to need," Brian Yarbrough, consumer analyst at Edward Jones, told Business Insider. "In the past, retailers could depend on people spending a little more."

The Federal Reserve Board reports that all groups of consumers had a lower mean income in 2013 than they did in 2007. Mean wealth also declined for all the groups.

Yarbrough said that even fluctuations in the weather can make a big difference for retailers, like JCPenney, which recently said that unseasonably warm weather was hurting sales of its fall fashion assortments.

"Today's consumer is waking up when its 35 degrees and realizing it's time to buy long sleeves or a winter coat," Yarbrough said. "They're not going to spend the money before they absolutely have to."

Macy's CEO Terry Lundgren has said that customer malaise is hurting his business.

"The consumer has not bounced back with the confidence that we were all looking for," Lundgren said at the Goldman Sachs Annual Retail Conference, weeks after the company reported sluggish second-quarter sales.

Lundgren also said he doesn't expect things to get better in time for the holiday season.

"The performance I think we had in the second quarter, and we expect to have in the second half, is going to be a continuation of what we've been able to do over the last several years - and that is to capture market share and get the most out of the consumers that are in our stores," he said.

Earlier this year, Family Dollar CEO Howard Levine said that economic conditions were worsening for his shoppers.

"The low-end consumer has not benefited in this recovery at all; in fact I think (they) have slipped further back," Levine said.

Even Wal-Mart is acknowledging that its customers are becoming choosier about how they spend.

Wal-Mart CEO Doug McMillon recently told investors that the brand has a renewed focus on offering the cheapest products.

"Price matters to our customers and it always will," McMillon said. "As a company, being a low cost operator is in our DNA. This will never change and we will be the price leader, across a broad assortment, everywhere we operate."