Submitted by Emma (not verified) on Thu, 04/28/2011 - 08:19.
"retailers may find it necessary to shift their resources toward the development of discount concepts: Some multi-brand retailers are already doing this. The problem, of course, is that discount formats can cannibalize higher-priced formats."
This is a very good point. The temptation in such hard economic times is to encourage volume of sales via discounts or running loss-leader products in the hope you can cross-sell the higher margin accessories at the same time. Unfortunately, this is a risky strategy and can erode profit margins to be point where retailers are just treading water and fighting tooth and nail to hit operating profits (just look at all the coupon code websites as a prime example.)
Now is a really good time from companies to invest in their brand and staff - ready to take advantage of any uplift in consumer sentiment. Cash-rich companies (old but relevant Forbes Report) will be able to weather the storm better, providing retail jobs (see http://www.successappointments.co.uk/) and reviewing their processes to trim the fat for better profitability.
Time to invest in brand and staff
"retailers may find it necessary to shift their resources toward the development of discount concepts: Some multi-brand retailers are already doing this. The problem, of course, is that discount formats can cannibalize higher-priced formats."
This is a very good point. The temptation in such hard economic times is to encourage volume of sales via discounts or running loss-leader products in the hope you can cross-sell the higher margin accessories at the same time. Unfortunately, this is a risky strategy and can erode profit margins to be point where retailers are just treading water and fighting tooth and nail to hit operating profits (just look at all the coupon code websites as a prime example.)
Now is a really good time from companies to invest in their brand and staff - ready to take advantage of any uplift in consumer sentiment. Cash-rich companies (old but relevant Forbes Report) will be able to weather the storm better, providing retail jobs (see http://www.successappointments.co.uk/) and reviewing their processes to trim the fat for better profitability.