Consumers Aren't the Only Ones Cutting Back

Analysts and the media have focused plenty of attention on how overindebted and tapped out consumers are responding to deteriorating economic conditions.

So far, there are clear signs that Americans are becoming more disciplined -- cutting back, saving, reusing, repairing and, overall, adjusting to a world where uncertainty is on the rise and there is much less to go around.

But the reaction is not one-sided. Those on the other side of the counter are also seeing the writing on the wall -- better late than never, I guess -- and are starting to make structural adjustments of their own.

In "Retailers Prepare for a New, Frugal Future," the Associated Press gives us the details.

Sales, keeping inventories down as consumers stay reluctant to spend

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 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, from ordinary groceries to jeans from brands they could once only aspire to.

Of course, the downside is that consumers who want something out of the ordinary — an olive green prom dress, for example — may have to look harder. Stores are rooting out offbeat, unpopular colors and styles, which will mean fewer choices.

Comments

[Chuck LeBeau:]

SmartStops.net published a sell alert on SKS more than a year ago (Jan. 4, 2008) after the stock had demonstrated unusual price weakness. The price of that sell alert was $16.51. There was also unusual price weakness in September and another sell alert was published at $9.75. If you are trying to pick a bottom, the current sell alert would be triggered at $2.16 (so you know what your risk might be).

Jan 23 04:21 PM