The recent recession may have something special going for the retail-focused stocks and exchange traded funds (ETFs) that focus on bargain-based retail.

Consumer buying habits appear to be evolving with the economy, meaning that the consumer is looking for ways and places to shop that stretch their dollar. The Chief Executive Officer of Wal-Mart (WMT) H. Lee Scott Jr. thinks that the typical American consumer is really concerned about their job right now, leading to a change in the way they spend their money, reports Horacio Marquesfor Money Morning.

Proof of the change in spending habits is evidenced by the world’s largest retailer, Wal-Mart, who last month reported a 10% jump in its third-quarter earnings per share; the company’s sales jumped 10%. A double-digit gain in profits during a recession isn’t so bad.

Changes within consumerism is also found on the pharmaceutical level, where there is an increase in self-treatment; more consumers are cooking at home and purchasing frozen items that store well; small business owners also alter their business pattern to match cash flow, meaning more frequent trips for one days’ supply, especially on the small restaurant level. Wal-Mart stores are accommodating to all of these shifts.

  • Retail HOLDRs (RTH): down 18.4% year-to-date; Wal-Mart is 26.4%

Retail ETF

  • PowerShares Dynamic Retail (PMR): down 19.7% year-to-date; Wal-Mart 5.4%

Retail ETFs

Meanwhile, Proctor and Gamble (PG) has cut their second quarter 2009 outlook as they are not able to meet basic sales target growth. This includes sales from acquisitions, of 4-6% due to the stronger dollar and weakness because of private brands, explains Vinya Ayala for Daily Markets.

  • Vanguard Consumer Staples (VDC): down 18.4% year-to-date; P&G 14.8%; Wal-Mart is 9.5%

Consumer Staples ETF

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.