Consumer Staples: Walgreens
1. Consumer Staples Analysis
The consumer staples sector often does well in recessions. The economy is in the middle recovery stage right now and it is a time to look at consumer staples. Consumer staples are companies that provide products that include the basic necessities of life. The basic necessities will always be bought by consumers no matter what the economy is doing. Companies within the sector do not have as much potential for immediate growth but provide steady growth over time. The relevant macroeconomic factors that affect information technology sector are economic, legal/political, technological, socio-cultural, demographic, and international.
The economic factors that concern this industry include unemployment, consumer sentiment, and inflation. The consumer staples sector need consumers to be employed: so the consumers will have money to purchase more products. As of March 2011 the unemployment rate has decreased to 8.8% after not falling below 9% from May of 2009 to January 2011. The unemployment rate should decrease as the economy continues to recover which will allow more consumers to purchase a variety of products. Consumer Sentiment has also increased over the past year. When consumers have a positive outlook on the economy they are more likely to purchase more products from staple stores.
1.1 Economic Factors
The consumer staple from a macroeconomic standpoint is a very stable sector because it provides consumers with the basic necessities that people have made a part of their lives. This includes food, tobacco, drug retail, food distributors, food retail, brewers, distillers and vintners, household products, personal products, soft drinks, and agricultural products. The best time to buy a consumer staple is at the peak of a recovery. Staples perform well during recessions because consumers do not stop buy the products they use every day. When the economy recovers staples do not grow...