In periods of government austerity measures and high unemployment, traditional consumer discretionary stocks, exposed to the downward pressures on real disposable incomes, do not look like a natural choice for investors.
There are some consumer stocks, however, that look set to benefit from consumers 'trading down' during tough times.
Greggs, for example, the UK high street baker, is positioned in somewhat of a 'sweet spot' and has grown market share, as consumers trade down from more expensive propositions such as Starbucks. This success has allowed Greggs to carry out an expansive store roll out in the UK, with another 90 net store additions planned for 2012.
Cineworld, the UK cinema operator, has also experienced strong sales growth, as consumers chose to treat themselves to a cinema visit rather than, for example, a concert or the theatre. Clearly, certain businesses within the consumer discretionary sector, which offer value for money, stand to benefit from these tough economic times.