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Retail sales slid for the third straight month in June, falling 0.5 percent according to the Commerce Department. Retail sales in May dropped 0.2 percent. Most analysts were expecting a gain of 0.2 percent in June. The last time retail sales fell for three consecutive months was in late 2008.

U.S. consumers are being battered on many fronts: a weak housing market, a stagnant labor market and a decline in wages. The Thomson Reuters/University of Michigan index, a measure of U.S. consumer confidence, fell to 72 in July from 73.2 in June. Lower gasoline prices, usually a boost to consumer spending, could not lift retail sales in June. The 1.8 percent decrease in prices at the pump also contributed to the weaker-than-expected retail number. Department store spending fell 0.7 percent in June, motor vehicle and part sales dropped 0.6 percent and sales of electronics and furniture both slid 0.8 percent.

Howard Davidowitz, chairman of Davidowitz & Associates and a longtime retail consultant, says he was not shocked by Monday's retail report.

"The American consumer is going to continue to get poorer," he says in the accompanying video. "They're going to shop at the places that are cheapest. This is not rocket science."

Davidowitz notes that Wal-Mart (WMT), Dollar Tree (DLTR), Family Dollar (FDO) and Dollar General (DG) have outperformed in this economy as more consumers cut back on spending and look for cheaper alternatives. He also cites weakness in the luxury space where he sees softening in high-end brands such as Tiffany (TIF), LVMH Group (MC.PA) and Burberry (BRBY.L). Further weakness in consumer spending will drag down corporate earnings this quarter and next, he adds.