Wal-Mart: the New Predator on the African Continent

With reading WS Journal article, I was surprised that the author described Africa as a large source of potential growth. It could be my own ignorance to a middle class on the continent, but I'm taken aback by the amount of risk Wal-Mart is able to impart in Africa. I do, however understand the total wealth that comes from some resource rich countries such as Nigeria, Tanzania, Botswana or South Africa.

But who is supposed to be shopping at the new mega-retailers? Most of the wealth is trickled out the country through energy giants, such as Shell in Nigeria, who for decades never gave back jobs to local Nigerian who live in abject poverty.

-Colin

http://online.wsj.com/article/SB10001424052748704654004575518340229099562.html
"Wal-Mart Roars into Africa"

http://online.wsj.com/article/SB10001424052748703694204575518310750642140.html
"Wal-Mart Africa Trip Takes Well-Trod Path"

H&M to Slow Store Openings Amid Building Slump

H&M is the third largest fashion chain by revenue in the world, falling just behind The Gap and SA (a Spain-based store). The store has been steadily expanding and opening more stores in shopping malls around the world. I know, personally, that the three malls I have back home all have an H&M, and I also remember that when I was in Madrid there were H&Ms every couple of blocks. The point being, H&M is very popular, it serves men, women, and children and their ad campaigns can be found everyone and and very eye-catching. It comes as a surprise to hear that they are not opening up as many new stores as they had planned even though they've had quite the successful quarter with a 23% rise in profits. Some problems the company seems to be facing with opening more stores is reflected in dealing with expansion into the southern hemisphere, because of the reversal of the seasons, the company will have to reverse their sales process as well. This past term, sales were better than the company had predicted, but apparently the prices of their clothes were kept too low to make the significant profit. H&M is a very successful company, and it is likely that it will continue to be so and thrive no matter the economy.

Source: http://online.wsj.com/article/SB10001424052748704116004575521153400543746.html?mod=WSJ_Retailing_leftHeadlines

--Leah Stoltz

Department Store Targeting Generation Y

Department Stores are now targeting a new audience, which is now Generation Y. They are refocusing their marketing strategies to sell to the a wider range of consumers, a more technology based generation. Department stores are trying to go in the same direction as smaller store such as Zara, H&M, and Forever21 who have been expanding a lot more lately and have the popularity with those under 25. Department store are also making it easier for teens who only shop online because everything is supposedly “easier” online by creating their own chain on teenage stores and placing them strategically by the entrance of the store in order to make it easier for the targeted consumer.

This is another few ideas on how retail is adapting to the change in technology in order to survive. I was reading about how a teenage in college no longer wanted tog o out and shop because it was complicated to go to stores and put an outfit together, let alone walk through an entire department store, so people like her, or the Y generation is now affecting the change in retail.

Articles from: San Diego Union Tribune. September 25, 2010

-Sales fell 11 percent last year; decline expected to slow but continue

-Old-Line Department Stores Finally Go After Gen Y

-Jacky Meltzer

Signet Hires New CEO

     Michael Barnes, who is currently Fossil Inc.’s president and chief operating officer will be taking over Terry Burman’s position as the new chief executive of Signet Jewelers. He is starting to work as CEO when Mr. Burman retires on January 29^th. Due to his new job, Fossil is now looking for a successor to Barnes.  As Signet chairman Malcolm Williamson states, Mr. Barnes is a “seasoned and accomplished manager" and said he "will be an able successor to Terry Burman,”

     I believe that in order for companies to succeed, it is necessary for them to hire new CEO’s about every ten years. With new, intelligent individuals comes new and different ideas. I strongly suspect that Signet Jewelers will benefit from Barnes’s new position because he is not only talented with a “business” mind, but will bring new thoughts and propositions to the table. Would you agree or disagree that a change in chief executives is advantageous to a company? Also, a new CEO might attract more customers to the company. With improved ideas, they can think of different strategies to market their product. Thus, an addition of new executives can be extremely essential to corporations in today’s society.

View this at:

http://online.wsj.com/article/SB10001424052748704116004575521843110736192.html?mod=WSJ_Retailing_leftHeadlines

Posted by Tania Dabdoub 

The Power and Challenges of International Business

"China's leading sports-apparel makers," Li Ning Co., has made moves to begin selling its products in the United States. The Chinese company has made deals with divisions of Foot Locker Inc. to sell its shoes in the U.S. Li Ning Co. also has signed "a multi-million dollar sponsorship deal with Evan Turner, the college basketball player recently taken as the No. 2 pick in the National Basketball Association draft by the Philadelphia 76ers" and "already has endorsement deals with Shaquille O'Neal of the Boston Celtics." This was done to "increase its presence in basketball" because basketball is one of the most popular sports in China.

Although Li Ning Co. is working to build up its presence in the United States it also is focusing on over coming competition from Nike Inc. and Adidas AG in China. The power and scope of international business is exemplified in this case; a locally based company has to compete with larger foreign based companies. Li Ning Co. is finding it difficult to compete with such large companies as Nike and Adidas because they are so well known and have such a strong global presence that Chinese consumers chose their products rather than the products of the local company. Li Ning hopes to bring local loyalty to the company.

I think that Li Ning Co. will have difficulty marketing and gaining sales in the United States for the same reason it is losing sales in China; Nike and Adidas dominate the market for sports apparel. International consumer loyalty is invested in the well known brands Nike and Adidas. The iconic Nike swoosh might as well be the "face" of sports apparel. Nike and Adidas have built up a reputation and loyal consumer base that is difficult for any company in the same market to rival.

It will take some time for Li Ning to build up a presence and consumer base in the United States. Sponsorships with professional athletes is definitely a start, but escaping the dominance of international sports apparel behemoths, Nike and Adidas, will challenge Li Ning. I believe that it would better for Li Ning to start small and focus on certain regions of China in order to create a local, loyal consumer base first and then begin to expand to the rest of China, then to the rest of the world.

http://online.wsj.com/article/SB10001424052748704791004575519731522505118.html?mod=WSJ_Retailing_leftHeadlines

Vendors On The Green

         Starting on October 15^th, vendor food trucks will replace the famous Central park restaurant, Tavern on the Green.  They will serve a variety of foods, including homemade soups, dumplings, filet mignon, and tacos. Four food vendors will be replacing the area where the Tavern’s Crystal room once stood.

        This new, emerging strategy of selling food is so unique, which I believe will make it easier for them to be successful in this business. In central park, the only food vendors I am used to seeing are those selling water bottles and hotdogs. Now, with this new business, people will be able to buy exotic foods such as dumplings and soups. Because this food vendor is so different, it will attract a variety of people, for many love “change”. There aren’t many people I know that enjoy eating the same type of food every single day. People love spicing things up; many will be drawn to this for it is something new! Also, the food being sold at these vendors is a bit more “high-class”. Thus, maybe the majority of these consumers will be people with a higher status. With higher-class consumers, they can buy more and bring along their friends. This, in turn , will be great for their business because now they are attracting customers that can afford a lot of their food on a daily basis. Because they are the only food vendors providing this type of food, they don’t have as much competition. As I stated earlier, the only vendors in Central Park sell hotdogs and beverages. I believe with the location and with offerings of unique food, they will make a much bigger profit than those selling the usual hotdog. Central park attracts  a myriad of international tourists and now, those tourists might just be able to eat food from their hometown. This new business not only will attract all kinds of individuals, but will also add an international flavor to Central Park.

View this at -

http://eatocracy.cnn.com/2010/09/17/food-trucks-on-the-green/?iref=allsearch

Posted by Tania Dabdoub

Google v. Facebook in the Advertising Field

I know this might be a kind of a stretch when it comes to finding a new company in the retail industry, but I thought this was very interesting and can be applied. We're all so used to Google advertising to us depending on what we search. Those top couple links aren't actually the number one search, but companies who paid for their link to be placed at the top so that you might just click on it. It's quite a clever advertisement, but now it seems that companies are picking a different internet forum for these ads- Facebook. The (just over 5 years old) social networking site has added a new application called "places" where one can basically "log in" to a place they've arrived at. This promotes these places to create a facebook page and advertise on the space in real-time to users of mobile devices as soon as they log in. Google is seeing Facebook as a threat because it seems that people are using Facebook as the new Google, searching for local businesses and "what to dos." Facebook creates more of a personal and easier to access advertisement as well as making it more user friendly since thousands of people are on Facebook at all hours of the day already.

Article: http://online.wsj.com/article/SB10001424052748703791804575439740544880692.html

--Leah Stoltz

Sony Enhances PlayStation to Take On Nintendo's Wii

The Nintendo Wii is supposed to be more precise ad accurate due to the type of controller it manufactured. It is said to be so comfortable and so realistic that the suer forgets they are holding a control in their hands. It is also about $200 less expensive than Play Stations. Wii should be expecting competition  once microsoft releases Kinect for the Xbox 360.


There is a competitive market in the electronic game industry and  the innovation of Nintendo Wii will push the competition to the next level. Competition like this i find to be int he best interest of the public because companies keep on improving their gaming systems and lowering the prices for the consumers. 


http://online.wsj.com/article/SB10001424052748704129204575505862851861670.html?mod=WSJ_Tech_LEFTTopNews


-Jacky Meltzer

Foreign Fast Fashion Reigns Supreme

Spanish company, Inditex is the fast fashion retailer to beat, according to the Wall Street Journal. With sales up an astonishing 68% from last year, the owner of the clothier Zara boasts the largest retailer by revenue at €628.3 million. Over the years,  Inditex has been diverting its markets from those in Spain and the rest of Europe to new markets in Asia and Europe. Sales in the Americas have stagnated over two years at 12%.

What is most promising about Zara and Inditex's sale composite is that there is still expansion into the Asian market; over the past two years, sales when from 12% to 15% as the total revenue for the company. East Asia's large population and demand for low-priced fashion should drive the demand for Zara's intuitively branded clothing through the roof. Similarly, North America and Latin America are nearly untapped resources for the company, who saw sliding market values at the implication that the company had softening sales. Competetion would be healthy in an American market dominated by European rival H&M and fast-fashion monolith Forever 21.
-Colin Dame

http://online.wsj.com/article/SB10001424052748704129204575507022743194954.html

Couture on a Budget

Last year, Harvard Business School graduates Jennifer Hyman and Jennifer Carter Fleiss created the comapany Rent the Runway. The company offers services in which women can rent designer dresses at a low price for a four day period and have the dress mailed to them, so they can wear it for their special occasion. The New York Times describes the company as "a recession-era twist on the Internet rent-by-mail model."

The company allows luxury retailers to reach a larger audience by making couture dresses more accessible and affordable. Now, the young woman interested in fashion, but on a budget can wear that Oscar de la Renta gown. Serving as a "creative marketing strategy," the company gives designers and their pieces exposure to a new generation, and if that generation likes what it sees then it will come back for more (The New York Times).

With the convenience of online shopping, Rent the Runway gives the chance for women to opt for a more unique and "fashionable" dress for their event, rather than having to shop at chain retail stores and buying a discount dress.

In the times of economic recovery, luxury brands have been inaccessible to the new generation of fashionable women and have been limited to the affluent shopper. With the introduction of Rent the Runway, these luxury brands are now more affordable and appealing to those women on a budget who have a fetish for Diane Von Furstenberg.

http://www.renttherunway.com/sites/default/files/001_nyt.pdf

Haute Couture Ethical Horror

In haute-couture retail and advertisement there have always been conflicts with ethics. The pressure to look perfect, be bone-thin, and stay on top of the industry. In this article, "‘Picture Me’: When Models Turn On the Camera" it talks about how a model exposes many of these conflicts first hand. She bring her own cameras to the sets and behind the scenes in order to expose some of the horrors of the modeling industry that convinces us how to dress, act, and look.  The man behind the camera, Ole Schell, is the main character and model Sara Ziff's boyfriend, he is quoted saying how “The outside of the fashion show is shiny and glistening, but backstage it’s another story.” The movie reveals such issues as breaching of child labor laws (girls break into the industry at ages as young as 13 and 14), sexual harassment issues (since the girls are so young and desperate they allow men to take advantage of them), and of course the hundreds of others issues surrounding the pressure to be the best of the best in modeling.
Models are the advertisement in retail, thus any ethical issues surrounding them effect us as consumers because we are being tricked. Ziff says herself in the trailer how the business is based off of fantasy, the industry can be one of trickery, brainwashing, and thousands of tons of pressures in every direction. One of my favorite parts of the article is where it states how Ziff has been hired for more jobs since the debut of the movie as a show of support. It is so heartwarming to see this reaction in contrast to the negative and critical article Ziff was expecting to get from the industry.


Article & Video: http://blogs.wsj.com/runway/2010/09/09/picture-me-when-models-turn-on-the-camera/?KEYWORDS=child+labor




--Posted by Leah Stoltz

Microsoft Inc.'s New Release

         Microsoft Inc. has released a newer version of its Internet Explorer 9, in hopes to attract a lot more customers, and win back “ground” in this competitive market. This new browser, known as IE9, makes web -browsing feel more like working in an offline application. E9 also functions as a new popular operating system, similar to the one in Windows 7. This new feature enables its users to put favorite websites on the Windows Taskbar for one-click access. Another characteristic that the E9 has facilitates one’s daily tasks, which includes writing an email, without having to first launch the browser.

         There exists a lot of competition in this “browser market”. Because Microsoft was known to be the “dominant” company at one point, the newcomers such as Mozilla Corp.'s Firefox and Google Inc.'s (GOOG) Chrome have made it difficult for them to succeed. Unfortonutely, IE's share of the global browser market dropped to 60.4%, down from 74.2% in September 2008. Thus, they hope to get its spot back with the help of the Redmond, Wash., which has gotten some companies together (Amazon, Ebay, and Red Bull) to help support the E9.

        Although it will be difficult regaining their ground, I believe it will be possible over the next few years. Due to this new browser,  I think people will be drawn to the new features on the E9 for it provides efficiency and speed to an individual’s computer. These days, everyone is in need of instant gratification; everyone wants things done right away. Microsoft has done a great job in coming up with something that fulfills this idea. It was also very wise of them to promote this new browser with Ebay and Amazon because their popularity will be a huge help. Many people go on both websites, and  they might be interested in Microsoft’s new creation. They need great advertising, and this is one great way to show off their new product. The more they advertise, the more likely they will draw customers to invest in the E9.

View this at -

http://online.wsj.com/article/BT-CO-20100915-711679.html?mod=WSJ_Retailing_middleHeadlines

Posted by Tania Dabdoub 

Ethics in Retailing

Retailers have been increasingly concerned with the conditions of under developed countries and the people who live in these poor conditions.  Many companies have given back to these under developed countries by donating portions of profits to organizations that work to help progress the development of these countries or the companies themselves take direct action.

The Wall Street Journal featured an article about the fashion line Edun that Bono, from the band U2, and his wife created for the purpose of "revitalizing apparel manufacturing in sub-Saharan Africa," according to the article.  The company, however, encountered problems achieving its mission and had to produce only a portion of its products in Africa because of Africa's limited manufacturing capacity.  The company hopes to increase the portion of clothes produced in Africa in the future.  Edun's mission states that 100% profits made off of t-shirts that feature artwork drawn by Kenyan school children will go toward funding "basic needs, such as lunch, supplies, healthcare, and development projects" at the Bidii School in Kenya.  Edun has also created the Conservation Cotton Initiative to "build sustainable farming communities and provide a fair trade market for their cotton" in Uganda.

Another company that is well known for its high level of corporate social responsibility is TOMS Shoes. The popular shoe company created the One for One Movement which is TOMS' practice of giving a pair of shoes to a child in need for every one pair that is purchased.  The shoe company also works with organizations to make sure children in poor countries always have access to quality shoes to protect their feet from disease and to educate families about the importance of wearing shoes.

Large corporations like Walmart also contribute to humanitarian efforts.  Walmart operates by a "philosophy" of "operating globally and giving back locally."  Walmart has donated money to help relieve hunger in America, as well as helped with relief for Haiti after it was hit by a devastating earthquake.

Many retailers have focused their corporate social responsibility on humanitarian efforts, concentrating on those who are in need in under developed countries.  They use the power of their profits and products to fuel progress, improvement, and change in these countries.


http://online.wsj.com/article/SB10001424052748704358904575478310504593870.html#articleTabs%3Darticle
http://www.edun.com/mission#
http://www.toms.com/movement-one-for-one
http://www.toms.com/how-we-give
http://walmartstores.com/CommunityGiving/

- Bria G.

Electronics Retailing

Many retailers such as Best Buy have realized that the main sales have been in hand held gadgets and personal devices that can be carried with them. "People are willing to disproportionately spend for these devices because they are becoming so important to their lives," -Best Buy Chief Executive Brian Dunn. Best Buy is now going to sell the iPad and Kindle to continue with their change in products. Sales and revenue have been up 5% since last fiscal year. Staples has also seen this changed and are trying to make some changes while keeping the original reason for Staples by also beginning to sell the Kindle.

I have realized a trend that these stores have caught on to as well, that in order for a retailer to survive in our society, it is necessary for the industry to change and adapt, which is exactly what Best Buy and Staples is doing. I see it every day and I agree that our society has grown attached to mobile devices such as iPods, iPads, cell phones, etc. 

http://online.wsj.com/article/SB10001424052748703376504575491533125103528.html?KEYWORDS=retail

-Jacky Meltzer

BK's Strategy: Play Catch-Up

3G Capital Management Inc., a private-equity firm is buying out Burger King Incorporated for a portion worth 3.3. billion. They plan to hasten their international expansion thinking that BK will gain more revenue since the roots of the company are in Latin America. Burger King in Miami has been hit bad with the recession, but according to Burger King's Chief Executive John Chidsey the fact that BK has been popular in Latin American has attracted more customers to the BK brand of fast food.


I agree with the idea that 3G Capital Management is doing because as people say, not only is America a melting pot of different backgrounds, but more like a bowl of salad because there are so much diversity in American, but they all have their separate communities as well. If Bk becomes popular in other countries when they go visit they will have a different feel for Bk and prefer Bk to their rivals. Personally going to Mexico all the time, I do admire many of the popular places and fashion trends and like to do what i can to still be connected while living in the U.S. Also since national companies sell different food to attract the different populace of that country, it also gives a new feel to the food. I know when i went to Israel and Prague it felt completely different to eat in McDonalds there than in the U.S. made me curious, which can potentially attract more people through word of mouth and international expansion. 




http://online.wsj.com/article/SB20001424052748704206804575467370505104544.html


-Jacky Meltzer

Rite Aid Adds Groceries To S.C. Stores

            Rite Aid Corp. has decided that they are opening discount groceries to some of its stores in South Carolina. Rite Aid is adding “Save-A-Lot” grocery products, which are units of Supervalu Inc. Its stores sell produce, meats, and household goods. Rite Aid thought it was best to add groceries in their South Carolina stores because they are all medium-sized, and also because their pharmacy businesses are solid. Their sales of items, such as beauty products, are not as strong.  
        

            On the other hand, Rite Aid’s rival, Walgreen Co. is trying to accomplish the same thing- their stores will start selling fruit and vegetables, soups, sandwiches and salads. They are also thinking about carrying goods such as salad bags and frozen pizza.

            Thus, because both companies are testing out a similar strategy, there exists a lot of competition. This makes it difficult for both Rite Aid and Walgreen Co. because not only do they have to re-think their cost on items, but they must also have to come up with different ways to reach out to their customers. This then involves more money for advertising because both companies need to attract customers from all over the state.

            I believe that this new emergence of grocery products in the stores is a great way of increasing their profit because food attracts a larger number of buyers. Now, Rite Aid will not only have a pharmacy, but it will provide us with lower-priced foods as well.  With this bad economy, I think many customers will want to shop at their stores, for they provides great deals. Competition will be tough, but risk will always be a factor in the industry.

View the article here: 

 http://online.wsj.com/article/SB10001424052748704358904575477832907868388.html?mod=WSJ_Retailing_leftHeadlines#articleTabs%3Darticle

Posted by Tania Dabdoub

Sluggish Economy Makes Retailers More Open to Change

Because of the recent economic decline, consumers have been turning to cheaper alternatives for the products they used to buy regularly.  Large cosmetic companies are facing competition with inexpensive drug store brands.  For example, as explained by a Wall Street Journal article entitled "Estée Lauder's Counter Makeover," Estée Lauder Cosmetics are implementing new strategies to attract consumers to their cosmetic counters in department stores.

Some of these new strategies include allowing consumers to browse for products and test the products on their own, eliminating the "nagging" consultant, and creating an "express line" for customers who already know what they want to purchase.  Estée Lauder is now making its products' prices easily visible, so consumers don't have to embarrassingly ask how much a product is.

Also, in order to boost sales, consumer loyalty, and the number of people who come into large department stores, Estée Lauder is offering promotions, such as handing out free samples of products and following up with the consumers on how they liked it.

Estée Lauder's Chief Executive Fabrizio Freda stated, "The recent recession has opened up many companies—for sure ourselves and many of our retail partners—to be willing to put more dynamic change into the way we go to market."  Other retailers for other products may undergo changes in the way they sell their products, all in efforts to attract more consumers during times of dwindling sales nembers.

Read the article online at:
http://online.wsj.com/article/SB10001424052748704855104575469901711752466.html

- Bria G.

Apparel Retailers Check Out Prices

SOURCE: http://online.wsj.com/article/SB10001424052748704476104575439112892856830.html?KEYWORDS=retail
Published: August 20th, 2010

Cotton prices are rising, along with freight costs and labor rates, this is trend results in the need for retailers to raise the prices of their clothing products. However, the problem lies with the fact that the consumer is still accustomed to the low prices featured during our economies downfall. The competitive retail environment is very sensitive, and though one company noticed a trend of increased number of transactions, the transaction size was noted to have declined because of the lower average prices paid.


The only option many companies, such as Gap Inc., Aeropostale Inc., and Buckle Inc. see as feasible is to raise their prices. Stage Stores CEO Andy Hall replies to this possibility stating "The market has kind of taken a wait-and-see approach to how much they can pass on, or we can pass on, to the consumer. I am not very optimistic that in today's environment the consumer is going to take a price increase." As the article states, another teen retailer hope to justify the price increase by adding embellishments to its products, still a gutsy move. I know as a consumer I would not be happy with a significant price increase to a product that has not changed, so we shall see how this plays out in the upcoming months.


--Leah Stoltz

Borders To Cut Prices On E-books

            Because of the strong competition in the “e-book” market, Borders Group Incorporated has decided to lower its prices on two of its electronic books. For instance, its Kobo reader will drop to $129.99 from $149.99 and its Aluratek Libre reader will go to $99.99 from $119.99 each. There exists strong competition with offerings like Amazon.com Inc.'s Kindle, Barnes & Noble Inc.'s Nook, and the Apple Inc. iPad.  Given this poor economy, Borders has had difficulty with their sales and is hoping to attract more costumers with their more affordable prices.

          

           This would allow for a lot more people to access these devices because now more individuals can afford them. Thus, Borders would create a bigger industry, and in turn, generate more income. Also, by integrating these goods through a global network of communication, everyone around the world can access these e-books. Borders’ strategy is to lower the price of its devices to make them more attractive. This would create a bigger customer base with the ultimate goal of  increasing its market share.

View article at:

http://online.wsj.com/article/BT-CO-20100831-708345.html?mod=WSJ_Retailing_middleHeadlines 

Posted by Tania Dabdoub

High-end brands are finding innovative ways to stretch their high-end dollar. Forcing its employees to wash their shoes of gold dust has become a custom at the Bulgari workshop in Rome, with gold prices reaching new highs, $965 a troy ounce. But collecting minute amounts of precious metals isn't the only way Bulgari is profiting in these tough economics times. The company is strategically mixing gold and other metals with cheaper substances such as ceramics and steel, effecting the production costs in small increments. The different combinations also allow for a greater margin of revenue. Bulgari, making most of its revenue from its more inexpensive products, such as fragrances and mid-priced watches, has decided to maintain a more diverse product line heading into 2011, a decision spear-headed by Francesco Trapani, the company's CEO. Trapani claims "Bulgari will benefit from a product assortment significantly larger than in 2009."

High-end retailers are definitely desperate to separate themselves from their pricey competitors, an increasingly difficult task in these days of international economic recovery. A brilliant move on the part of creative director, Paolo Bulgari, the use of mix material jewelry such as ceramics should change the landscape of couture and mid-range accessories. Making a more accessible product should bolster Bulgari's product line and make it a fiercer competitor in the marketplace. 

-Colin

Link to Article

Retail Stores closing down

Many retail stores have either began to close stores or cut back on their original plans to expand their chain stores. Several of these stores were eager to make more money and made plans assuming that costumers would be spending as much as they did in a particularly good time in the economy.

Places such as home Depot have been feeling the pressure in their chain and are one of many stores that are cutting back on expansion. Construction has still been slow and has not helped business. Cutting down on sales floor space over the past few years from 4.9 percent to 1.5 percent has saved Home Depot $1 billion in construction in the next 3 years.

To see site:

http://www.nytimes.com/2008/05/02/business/02shop.html?ref=retail_stores_and_trade


-Jacky M.

Consumers' increasing frugality impacts retailers

As reported by the Wall Street Journal, American consumers were cautious about their spending this year during the back-to-school season.  The Wall Street Journal stated that MasterCard Advisors reported that "Shoppers spent slightly more last month than they had the year before...but in nearly every category, the sales numbers were far short of 2008 levels..."  This consumer behavior reveals that the economy has been slow to recover.  With the economy in a such a state of slow recovery, people are becoming more frugal when making purchases.  The Wall Street Journal reported that shoppers only bought "basic items" and latched on to discounts and sale items when shopping for back-to-school items.

                                                                                          The Wall Street Journal

 Retail analysts project that this holiday season, consumers will continue practicing their frugality.  Christmas shopping usually boosts the sales of retail stores, but this season it may not bring in that much business.  In the hopes of increasing sales, retailers will be forced into strong price competition; retailers will lower their prices to attract consumers to spend.  In order to eliminate inventory surpluses, retailers will vigorously promote low prices, discounts, and "deals," such as "buy one, get one half off."  Retailers will be faced with the challenge of attracting frugal consumers and convincing them to spend their money.

Read the article online at: http://online.wsj.com/article/SB10001424052748704421104575463861273438000.html?mod=WSJ_article_MoreIn_Business#articleTabs%3Darticle

Posted by Bria G.