The retail recession: A permanent change in behavior?

Today’s (April 6) Retail Wire includes an interesting discussion about whether the current consumer belt-tightening is a temporary or permanent development. Several experts weighed in on the kinds of changes that retailers should anticipate in the future. Here’s my opinion:

It’s hard to know how much of the short-term contraction in consumer spending is going to affect long-term behavior. Truth is, none of us has experienced anything quite like today’s retail economy in many years, whether we are retailers or outside observers of the industry. I don’t pretend to have a crystal ball but would forecast some of the following:

1. At some point consumers are going to return to the mall and start spending again. (There is some statistical and anecdotal evidence that it’s already happening.) The endless series of months with sharply negative comp sales reports will come to an end, perhaps as early as the second half of this year.

2. Even though retail sales may rebound, consumers are still going through a process of “deleveraging,” which will affect their mindset on discretionary spending and credit card usage. So it may be awhile before we return to an era of conspicuous consumption and buying for status.

3. Goods and services with a utilitarian slant should continue to thrive, whether in consumer electronics, home goods or softlines. Especially as more baby boomers stay in the workforce longer than expected, they will be looking for items that help them manage their time and lives more efficiently. The smartphone is an example of the type of device that will continue to gain market share.

Are we in a state of permanent retail slump? No, not as long as the retail survivors tweak their strategies to address changes in long-term consumer behavior.

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