US retailers are adopting high-end sales tactics.
August 13, 2009
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I must admit that few things scare me more than visiting a high-end retailer such as Neuman Marcus or Saks. In a middle of a big an empty space there is usually an object of presumably high value, masterfully accentuated and illuminated. Around it you see 4-5 sales people circling like hungry lionesses ready to jump on their prey. Saks and Neuman are not doing so hot these days, however. All the wild game (i.e. shoppers with money) is hiding. Most likely, because they have much less money right now after stock market and housing collapse.
Imagine my surprise when I see their strategy being adopted by mid-range retailers, such as Gap and a few others. In the previous recession these retailers had huge sales. Now, there is nothing on sales, almost everything is full price and noting sales consequently.
I am assuming they are trying to maintain their profit margins. Well, good luck. Inventories, I hear, are at record low levels. But those banking on restocking are going to be disappointed. Those inventories don’t sell because consumers came to expect 50-75% sales in recession; they aren’t going to be buying at full prices any time soon. May be in 2 years, if all retailers follow the same route. It works in Europe, after all. But otherwise Gap and others will simply go out of business because everyone will switch to Wal-Mart.
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