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For retailers this season, the high and low end are where it's at.

As last week's

November same-store sales results helped make clear, consumers have increased their shopping in two kinds of stores: luxury-goods purveyors and discounters.

While moderate- to high-income consumers are dishing out more on smaller quantities of unique, high-end items, low-income consumers are holding hard and fast to their favorite discounters for necessary goods, such as food and other consumables.

"If there is a message that one can garner from November sales results, it is that the consumer is just fine, but some are finer than others," wrote Morgan Stanley analyst Bruce Misset in a post-November same-store sales research report.

The luxury sector's November comps were among the best in retail.


(JWN) - Get Nordstrom, Inc. Report

jumped 7.4%, compared with a 1% drop in November 2002;

Neiman Marcus


posted a 5.8% rise, the same increase as the prior year; and



had a 6.7% increase, compared with a 7% decline a year ago.

The shift to luxury is also showing up in stock prices. Nordstrom shares are up about 70% year to date, with about 36% of the rise coming since early September. Neiman Marcus' stock has risen about 24% since September, and Saks shares are up 19%.

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On the other end of the spectrum, discounters' November comps were solid as well, and have been for the past few months.


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had a 3.9% rise in same-store sales, while


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shot up 14%, and

BJ's Wholesale Club

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posted an 8.4% rise.

Obviously, the stores have different clienteles. While the high-end consumer is defined as having about $1 million in liquid assets, the low-end consumer's first priority might be paying the heating bill, rather than shopping for a new TV, noted Northeast Securities analyst Eric Beder.

"Moderate shoppers are 'trading up' and buying fewer, better goods, demonstrating their willingness to pay top dollar for differentiated products and services," believes Smith Barney analyst Deborah Weinswig. "However, low-end consumers remain cautious with discretionary purchases and continue to spend on need-based items."

"People will pay for excitement and originality," said Beder. He believes that consumers are compelled to shop at the luxury department stores now because they carry fresh, unique and sexy merchandise.

Along with the economy, a creative recovery in the fashion world has also taken place, he said. "Halloween is a register of how people feel. It was somber for the past two years. This year, however, we saw people get out of their shell and want to have a good time."

It's no mystery that consumers now have more money to spend thanks in part to government tax refunds. Many shoppers were conservative in spending when the U.S. was at war with Iraq, which has translated into pent-up demand now.

Last Wednesday, Neiman Marcus reported that third-quarter earnings nearly doubled, helped by strong sales. Nordstrom's profit more than doubled in its most recent quarter, while Saks latest results were strong, too.

Overall, "confidence is much higher. Put it all together, and people go shopping," said Beder, who holds no shares of the companies he covers and whose company does not do investment banking.

"Over the past few years,

most people have been shopping at lower-end stores, and now they want to treat themselves," agreed Don Geiman, an analyst at McAdams Wright Ragen, who covers Nordstrom and does not own any shares of the company.