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As shoppers pull back, retailers adjust model

NEW YORK — For years, retailers could afford to be sloppy about running their businesses because customers kept buying. No more.

Stung by the worry that shoppers — who cut spending by the most dramatic amount in at least 39 years this past holiday season — may not start spending again for a long time, stores are making drastic changes. They are cutting out marginal suppliers, hiring outside experts to keep inventory lean, holding special events for those who are still buying and making extraordinary efforts to gauge customer satisfaction.

The new discipline will be mostly good news for shoppers, who will find stores less cluttered and see an array of products at lower prices.

Of course, the downside is that consumers who want something out of the ordinary may have to look harder. Stores are rooting out offbeat, unpopular colors and styles.

Sales clerks are also checking back with customers to see if they’re satisfied with their purchases.

"We are in a sea change," said Millard "Mickey" Drexler, J.Crew’s chairman and chief executive.

Pricing goods within reach of strapped consumers also is a big focus, given the way nervous consumers have stopped shopping. Same-store sales, or sales at stores opened at least a year, fell 2.3 percent in November and December together, according to the International Council of Shopping Centers.

J.Crew is working with factories to adjust prices on items. It’s cutting inventory and expenses.

Status denim brand Rock & Republic will ship a new Recession Collection this spring that runs about half the usual $200 price tag for its jeans.

Even supermarket chain SuperValu Inc. has promised lower everyday prices on groceries and more promotions.

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Chief executives from Crate & Barrel to J bad credit payday advance.C. Penney acknowledged during the National Retail Federation meeting this month that they’re navigating new territory, predicting that the fundamental shift by consumers to spend less and save more will linger.

The biggest unknown is when or if shoppers will resume spending the way they did when the housing market was booming, credit was easy and jobs were more plentiful.

This sudden hibernation of customers is leading even the luxury retailer to try new strategies. Neiman Marcus is eliminating some vendors and focusing on serving its best customers.

Weaning customers off discounts is a big challenge for the industry, as people got used to them — particularly on luxury brands that hadn’t been discounted before sales all but dried up.

For the past two years, many of the nation’s best-run stores, such as J.C. Penney Co., had been reducing inventories in response to the consumer spending slowdown. But no one anticipated the severe retrenchment that hit in September as the financial meltdown ravaged the economy.

As shoppers simply stopped buying, stores were forced to discount as much as 75 percent off in some cases even before the official start of the holidays — resulting in the weakest season since at least 1969, when the ICSC index began.

Some companies, including KB Toys Inc., couldn’t make it through the Christmas season, and many more are expected to file for bankruptcy in the coming months. Circuit City Stores Inc., which filed for Chapter 11 bankruptcy protection in November, said Friday it will go out of business — closing its 567 U.S. stores, after not being able to work out a sale.

With no sign of the economy improving soon, merchants are preparing for times to get worse. Those who have survived face battered fourth-quarter profits and are slashing expenses and hoarding cash.

Companies like Polo Ralph Lauren Corp. are turning to outside specialists in areas like sourcing and currency hedging to reduce the impact of volatile foreign exchange rates. And they’re trying to understand the new mindset of shoppers.

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Dieser Beitrag wurde am Tuesday, 20. January 2009 um 23:17 Uhr veröffentlicht und wurde unter der Kategorie money abgelegt. Du kannst die Kommentare zu diesen Eintrag durch den RSS-Feed verfolgen.

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