Recession forcing retailers to think small

BusinessWeek ^ | September 9, 2009 | Anne D'Innocenzio

[Vince Ferrer]

The Great Recession and Americans' retreat into thriftiness are teaching retailers a new lesson: How to survive when consumers are focused on "needs" rather than "wants."

For years, shoppers splurged on everything from $5 lattes to $200 jeans, and retailers responded by opening more stores and offering more choices. Now, beset by high unemployment and limited access to credit, shoppers are limiting most of their purchases only to essentials or the best deals.

[Vince Ferrer]

Merchants are now keeping less stock on hand and delivering goods into the store more frequently to keep stores looking fresh, instead of having items sitting on the shelves for months. Retail executives hope that strategy will help cut down on aggressive discounting.

The long-term goal is for merchants to carry 1 1/2 months' worth of inventory, compared with 3 1/2 months in the past, says retail consultant Burt P. Flickinger III.

This Christmas is make or break, and everyone in retail knows it. I haven't been to a mall this year, but I have noticed changes the last month or two at the grocery store and Wal-Mart. I have noticed a definite focus on cheap food and goods. First there were sales of the more expensive brands, but the focus has now shifted to the cheaper house brands, and especially storable "survival" goods.

The moment when I really noticed things had changed was the day I was in a Wal-Mart, and after having bought a few things, I casually went down the aisle and took some extra dried foods. As I was doing this, I noticed the cart next to me, which was being entirely filled with dried pasta, beans, rice, and canned goods. I started wondering how many of us are doing this. The answer came indirectly, because the grocery stores are now offering whole stacks of canned tuna, pasta, spaghetti sause, etc at bargain basement prices.

[Need4Truth]

About 143,000 stores closed last year, the highest number since 2001, according to an analysis of government figures by Michael Niemira, chief economist at International Council of Shopping Centers.

He predicts 140,000 more will close this year and 135,000 in 2010. That will worsen the already gaping holes in malls across the country.

and Obama says he pulled the economy back from the brink.

[parsifal]

“For years, shoppers splurged on everything from $5 lattes to $200 jeans, and retailers responded by opening more stores and offering more choices”

Hey, Business Week is ripping off my “Frippery Slope” idea! I want royalties! (”frippery” means unnecessary or non-essential)

parsy, the indignant