Retailing During a Consumer Recession

Economists and politicians can debate the state of the broader economy, but there is no doubt in my mind that we are in a consumer recession. Consumers have lost much of their discretionary spending power since they have to allocate a greater portion of their budgets to pay for fuel, household energy and rising food prices. Some are worried about their jobs, since many companies have announced cutbacks in their employment ranks.

Retailers have been trying to reach costumers who, in recent interviews, concede that they are spending very little on themselves — and when they are shopping, they are looking for lower prices. Stores are often cherry-picked during their sale promotions; more of the loss leaders sell quickly, while other merchandise remains unsold. If that trend continues, we will see an environment with nothing but sales, rendering fashion offerings limited and unprofitable.

It is time for all retailers — from Macy’s and Saks to Walmart and Target — to begin a campaign to motivate their customers to become more fashionable. I think a slogan like “Look smart for work” could define fashion for young customers. Emphasis on smart dressing is important: If there is no fashion drive in many classifications then we will only see sales of safe merchandise in black and white. No color and no unusual garments would dominate the fashion scene.

Creativity in selling
There also has to be more in-store merchandising. Displays have to be changed frequently in order to generate fashion excitement among customers and associates.

Let us also revive the art of selling. I think we have forgotten how easy it is to sell more merchandise to the same customer while she is in the store. It should not be bargain tables, but something innovative or interesting that would excite her.

Retailers can make their stores more entertaining. A Swiss company recently dressed its associates in opera costumes. It was quite fun for everyone and customers bought lots of merchandise during the event.

I do not think Macy’s at Herald Square can dress everybody in costumes, but its flower show is unrivaled; equally exciting is the annual Thanksgiving Day Parade. These types of activities bring more customers to Macy’s, and other retailers should be equally inventive in their efforts to attract customers to their stores.

With the weak state of the U.S. dollar, our gateway destinations have become inundated with foreign shoppers — yet I have seen very few badges on salespeople indicating that they speak another language. These shoppers would be quite happy to find someone who spoke French, German or Spanish.

Online opportunities
Retailers also could use the Internet more effectively for excellent payback. Companies like Toys “R” Us, Barnes & Noble, Polo Factory Outlet, Lands’ End and others reach me frequently via e-mail and, increasingly, my cell phone. I believe that online sales will increase 20 percent this year, primarily in classifications such as women’s apparel, children’s apparel, men’s shirts and ties, accessories, toys, hobbies, books, sports and fitness, watches and jewelry, home and garden and consumer packaged goods.

The retailer is a born optimist; he must be in order to be successful. Right now, in this hostile economic environment, I see opportunities for retailers to be creative and innovative. That will make them winners and create future opportunities for growth.