AChallenging Season

It would be great at a time like this to provide one clear, simple answer to what is happening in the retail industry. However, this will not be possible. The November and December sales results, which must be looked at together due to the calendar shift, reflect two unrelated sets of factors that must be viewed separately.

First, there are the issues over which management has little control, including consumers’ concerns about rising food and fuel prices and shaky consumer confidence. These factors clearly came into play this year and appear to have affected retailers across the board and impacted the overall comp-store trend about 1%.

The second set of factors are issues that management can affect, including effective planning and knowledge of consumer demand. Based on our consultants’ observations this holiday season, in many cases the merchandise for the biggest shopping period of the year could be described as cautious and boring. While it is prudent to manage risk, as the old saying goes, you can’t do business from an empty cart. Holiday is the time of the year when consumers are looking for attractive merchandise they will be proud to give. Too much caution in merchandise selection protects the margins, but it limits the sales. The last time I checked the equation, low sales equaled low profits.

Our recently completed National Shopping Behavior Study (which is posted on The Gordman Group Website, www.gordmangroup.com ) once again confirmed that by far, selection is the No. 1 reason consumers change where they spend their money. They shop at stores that have the products they want. Selection was given almost half the time and two-and-one-half times more frequently than price as the reason consumers change stores.

In this difficult retail climate, retailers such as Saks, The Buckle, Costco, TJX, Aeropostale and Jos. A. Bank were able to plan and buy merchandise that appealed to their core customers. It is very likely that these retailers will report strong profits.