Strategies for the “new normal”

Here’s another discussion from RetailWire about “the new normal” of reduced consumer spending. The discussion centered around whether this is a permanent development, and whether retailers have done enough to adapt:

I think the fourth-quarter results from many retailers (moving into the black) show that their strategies have already changed. With few exceptions, comp-store sales were modest at best and even the biggest increases are barely putting retailers back at pre-2008 sales levels. So the smart retailers have figured out other strategies: Tougher expense management and better inventory control. Much of the gain in profitability came from efforts to get fewer goods into the right stores; the reduction in markdowns led to higher margins for many stores.

The good news: Many of these efforts to manage expenses and inventory levels will leverage dramatically if and when there is a recovery in demand. The less good news: Without a real increase in comp-store sales, these operational strategies can only be pushed so far before they become counterproductive through stockouts and declining service levels.

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