“There’s still a lot of stress,” Wal-Mart CEO Mike Duke said on a taped interview on NBC’s “Today Show.”

“It’s not a ‘V’ recession, where we’re just going to bounce out and come back,” he said.

Duke’s comments aired a day after a government report showed that sales at U.S. retailers unexpectedly fell 1.1 percent in March and after Wal-Mart last week reported a lower-than-expected rise in March sales at U.S. stores open at least a year.

Also on Wednesday, Burger King Holdings Inc (BKC.N) said it faced an “unanticipated traffic slowdown” in March across most company-owned hamburger restaurants, while the government said U.S. consumer prices fell unexpectedly last month, recording their first annual drop since 1955, as slumping demand pushed down energy and food costs.

The reports have dimmed hopes that the U.S. recession is close to hitting bottom, and show consumers are keeping a tight grip on their wallets. In early trading, Wal-Mart shares gained 10 cents to $51.22.

Duke said that by the end of the month, just before traditional paydays, customers are left with only a few dollars to spend.

He said the downturn will lead to a “sustained change” in the way that families live. But he added that customers are buying electronics, like flat screen TVs or video game systems, as they cut back on entertainment outside of the home or scrap vacation plans.

Separately, Wal-Mart’s China unit said it will eliminate one management layer of its stores in China to improve efficiency, affecting up to 1,400 people.

The retailer, which has 147 outlets in China and employs more than 50,000, will offer affected employees the option to move to new stores or take other positions with lower salaries.

© Thomson Reuters 2009 All rights reserved

The growth rate this year is expected to be volume-led. “Since April this year, we are witnessing an upturn in growth rates. Post-election results and a stable government assuming office, sentiment across corporates, trade and consumers has turned positive,” said Parle Biscuits executive director Arup Chauhan.

These companies are also investing significantly in distribution and tailoring their products and prices to specific geographies as demand picks up in both urban and rural markets. “Both urban and rural growth numbers are encouraging and we are recording our strongest growth in recent years. Buoyed by the overall political stability and expected fiscal stimuli, consumer confidence has picked up remarkably,” said Godrej group chairman Adi Godrej. Rough industry projections estimate growth at 30% in 2009-10. The industry recorded 17-18% volume growth in the last financial year.

Dabur has delivered its best organic growth in a decade in 2008-09 and is optimistic about continued strong performance. “New products contributed almost 20% to the sales growth during the last fiscal and we expect this contribution to go up to 30% in 2009-10,” Dabur COO VS Sitaram said.

Outlining key drivers that have led to growth at Dabur, Mr Sitaram said focus on rural markets in key states, coupled with sharper brand strategies, increasing competitiveness of brand propositions and investment in sales force with the introduction of category-focused teams in top markets worked for the company. Dabur ended 2008-09 with a 17.5% growth in net profit and gross sales of Rs 2,834.11 crore, up 18.3% over the previous year.

With summer setting in, the beverages segment too is witnessing higher sales. PepsiCo is recording a 30% growth in the current quarter against 12% in the same quarter last year. “The beverages arm has been clocking unit case volume growth of 30%, with both carbonated and non-carbonated drinks posting healthy growth,” said PepsiCo India chairman & CEO Sanjeev Chadha. Rival Coca-Cola’s India division has been posting unit case volume growth of 31% — its highest since the pesticide controversy in 2003.

To address healthy rural demand and a cautious urban consumer, companies such as Hindustan Unilever (HUL), Nestle, Procter & Gamble, Godrej and Dabur are shifting focus to volume growth and making higher investments in mass brands. HUL, which had been focusing on premium high-margin products, is now sharpening its mass-products strategy.

Foods companies such as Nestle, Britannia and Frito-Lay have introduced multiple price points to prevent the consumer from downtrading. Latest ACNielsen numbers indicate that low-priced packs are growing faster than bigger ones.