The Year of the Merchant

I don’t have to tell anyone that 2009 was a rough year for retailing. Consumers retrenched and only responded to promotional events; even Christmas was dotted with unusual sales and promotions. There was little innovation in merchandising, and it seems everyone fought for recognition and share of market.

Some retailers did it better than others, but all of them understood that their customers were not in a spending mood. The uncertainty of continued employment and the lack of job creation, as well as the volatility of the housing market, were some of the specific reasons that spending was restrained. The simple fact is, most people just felt they were poorer.

In response, retailers sharply reduced expenses: inventories were brought in line with sales expectations and selling costs were trimmed at the same time. It was obvious that any slight improvement in sales over plan in the final quarter of the year would help the bottom line, and the results for fiscal 2009 were better than anticipated before the Christmas season started.

Now, however, retailers must show that they can merchandise their stores in the current environment and grow their franchises. I believe that the worst of the recession is behind us in the United States, but Europe may still have to go through a catharsis since many part-time jobs are being eliminated, and the lack of short-time hours, which had required belt-tightening, may further delay the recovery.

Responding to the consumer
I think that retailers have an opportunity to fight for greater share of market and expand their sales in 2010 and 2011. Listed below are some observations and suggestions to help retailers boost sales while maintaining margins.

Retailers should develop fresh associations that will attract new and younger customers. Macy’s debuted Rachel Roy’s new diffusion line, Rachel Rachel Roy, in the fall, delivering contemporary looks with a young attitude. J.C. Penney has announced an exclusive deal with Mango of Spain to have the youthful MNG label in its stores, and Kohl’s has partnered with Dana Buchman.

Multi-channel distribution of merchandise is profitable. People will buy online and trust the site’s claim, and short-term promotions work well when promoted over the Internet.

Fashion retailers must become more aggressive in showing a rainbow of colors in order to attract new customers and create fashion excitement. In today’s fashion world, the promotion of black and white is safe – and dull.

Stores should rehire fashion coordinators to spruce up the whole store and generate excitement. Stores should be ready to tell customers what the fashion trends are and what they should look for.

Partnering with designers is important and exciting. The ability to buy a fashion designer’s latest work on an exclusive basis from Macy’s, Bloomingdale’s, Target or J.C. Penney assures stores that they will gain greater fashion recognition from their customers.

Retailers should pay attention to special sizes – whether it is petite, large or junior. Currently, ’tween sizes are getting more attention from specialty retailers like Aeropostale and department stores like Macy’s.

Consumables attract customers and help gain repeat business. As such, it is a classification of merchandise that should be refined by retailers.

Management teams must review the productivity of stores and review store hours. Many retailers have been reluctant to close under-performing units or alter hours of operation.

Much of this advice is merely sound merchandising, but it is time for retailers to show their customers that they are being responsive to their needs.