Turnaround hinges on increased store spending

Several leading executives with retail insight discussed how retailers can survive the stormy economy, and when it will end, at last week's NRF session, "The Economic Outlook for the Retail and Consumer Products Sector."

Several of the panelists felt that the recovery will begin when businesses themselves start spending again. Retailers spent last year driving down their inventories, building up cash and such, but "when business turns around and spends" will be when the economy picks up, said Roger Farah, president and coo, Polo Ralph Lauren.

"There is a huge imbalance between what the stores are selling and what the stores are buying," said Leonard Lauder, chairman, Estée Lauder, adding that he believed there will be a surge in replenishment this quarter. "Are stores too cautious? If they are willing to take the plunge, then by the fall we will be on the way to recovery," he said.

Terry Lundgren, president and chief merchandising officer, Federated Department Stores, countered that he would not be one of those retailers to take the plunge. His focus instead for Federated is to simplify the shopping experience and get more customers in the stores, adding "more excitement … Our stores have great value. The question is, 'Is the customer aware of that?' "

He also wanted to clarify the message, attracting the customer with merchandise that is fashion-focused, exclusive and new. If an item has limited distribution, the customer buys it because of its quality, not price, which is why more customers are purchasing Federated's private label brands, he said, which are about 16 percent of the merchandise storewide. He added that several home textiles categories performed well last quarter.

At the Home Shopping Network, 85 percent of product is exclusive, said Mark Bozek, ceo, and customers that shop both the television show and site buy 26 percent more than customers than only shop one of its channels. He also believes that bricks-and-mortar stores have lost that entertainment edge — a void HSN tries to fill. He added that the textiles category is growing, and some items, like throws, do very well.

The home category will do well now because more people are staying home, said Farah. However, "Even in tough times, the right product always sells," he said, adding that the company invests heavily on design and marketing.

Home & Textiles Today Staff | News & Commentary

 Home Textiles Today is the market-leading brand covering the home and textiles markets, offering a comprehensive package of print and online products. Home & Textiles Today provides industry news, product trends and introductions, exclusive industry research, consumer data, store operations solutions, trade show news and much more.

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