The Road to Recovery : Survey Finds Some Industries Rolling Along but Others Are Stalled : RETAILING

No industry is counting more on a reborn consumer than retail. Staggered by competition, burdened by a surplus of shopping malls, many retailers began slumping long before the recession. But certain firms, particularly ones that sell moderately priced merchandise, could be spearheading a modest recovery.

In May, chains such as Wal-Mart, Clothestime, the Gap, Limited and Kmart posted solid sales gains. A survey of 16 discount and moderate-price chains by the newsletter Retail Marketing Report found that sales at stores open more than one year rose 9.5% last month from a year earlier.

Retailers that offer low prices or good values are benefiting from the increasingly conservative mood among U.S. consumers, market researchers say. Well-financed companies that have spent heavily to remodel--such as Nordstrom and Limited--are also expected to benefit from the recovery.

Still, merchants continue to buy goods cautiously and are keeping inventories lean out of fear that the coming months will bring just gradual relief. “The consumer isn’t convinced it’s time to start buying again,” said a spokeswoman for Minneapolis-based Dayton Hudson Corp., which owns the Target and Mervyn’s chains and higher-price department stores in the Midwest.

“Where we’re really hurting is in California,” she added.