Going for the Gold
By Jennifer Marks -- Home Textiles Today, 8/18/2008 12:00:00 AM
Welcome to the Retail Olympics, a global competition pitting the world's savviest merchants, designers, manufacturers, importers and exporters against one another in a quest to bring to market hot new products at reasonable prices.
The Gold Medal goes to … value retailers. One retailer's economic headwind is proving to be another retailer's economic tailwind. Both Wal-Mart and TJX reported impressive profit increases last week as consumers dive downmarket in a tough economy.
Wal-Mart's food and sundries positioning and one-stop shopping format obviously gives it a big boost as consumers focus on minding the budget and finding ways to drive less often. Not to mention, Wal-Mart sells gas. Ka-Ching!
TJX's boffo quarter suggests that while consumers' disposable income has diminished, their appetite for brand name apparel has not. Home is coming along at both Marmaxx and HomeGoods and doing quite nicely in Canada and the recently launched U.K. format.
The challenge for all value retailers reaping the rewards of consumers shifting down-channel will be hanging on to the new bargain-hunting customers when the economy improves.
Silver Medal to … entrepreneurial suppliers. Between 2002 and 2006, it seemed like every month brought word of a new supplier setting up business or an off-shore manufacturer establishing a U.S. division. That process appeared to hit a wall in 2007. But recently, the trend appears to be rebounding, with many of the newcomers targeting independent specialty retailers or a combination of independents and better/best volume retailers.
Call it creative destruction or some extension of the chaos theory, but clearly people see opportunity amidst the economic carnage. Or maybe it's just easier to jump into the business now that inflation is forcing wholesale prices back up.
The challenge for newbies will be how quickly they move along the learning curve. The situation in 2008 is not what it was in 2000-2003, when accounts were willing to teach new resources how to do business properly. Today's fledglings need to know the ropes from the get-go or they'll find themselves exiting the market just as quickly as they entered it. Hint: It never hurts to hire a seasoned pro, and there are plenty available.
Bronze Medal goes to … trade shows. We're rounding into the final lap of the Atlanta-Las Vegas-New York-New York cycle of home furnishings shows and thus far the news has been: 1) fewer but more serious buyers and 2) smaller, more cautious order-writing. On the upside, retailers of all sizes have been keeping inventories so tight they've got to have new product.
The challenge will be managing just-in-time delivery in a long-lead supply chain.
And now, on to 2009, where some will experience the thrill of victory and others the agony of defeat.
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