It’s a Long, Long Way From May to December
It's almost the start of the fourth quarter. Do you know where your customers are?
It's got to be a question retailers from one end of the country to the other are asking themselves as they try to figure out what in the world is going on out there.
As recently as May, if you asked most store executives about how they were feeling about prospects for the balance of the year, you generally would have gotten fairly positive responses. It was a pretty good spring at most stores, the consumer wasn't starting to feel better about things in general, and retailers were placing orders for the holidays that reflected those buying patterns.
But, as the song says, it is indeed a pretty long stretch from early spring to the end of the year and somewhere along the line, not only have the wheels fallen off the train, the train itself seems to have fallen off the tracks.
The consumer is clearly spooked by all of the horrible news coming out of just about everywhere: Washington, Wall Street, Europe and all points in between. She's worried about her job, her house, her 401(k) and the last thing she's thinking about is buying home furnishings.
The round of summer home and gift shows just concluding was not a pretty picture. At almost all of the shows, buying was pretty conservative and concentrated more than ever with the tried and true larger suppliers.
Cotton prices may be coming down - so fast that it shows this was much more about speculation than crop yields - but that's not going to help a whole lot for the balance of the year. Home textiles retailers have been dealt their cards and they are going to have to play their hands this holiday.
So, if you're a retailer what do you do? You're probably sitting on a little too much inventory and it's inventory that you no doubt paid more for than you used to, which means you have a little less margin for promotions that a year ago. Yet you're going to have to drive your business to make things happen. So it's time to take out the coupons, the one-day sales and all the other promotional paraphernalia in your arsenal.
This fourth quarter is not going to be the slash-and-burn scene we saw in 2008 when things collapsed in about five minutes. But it has the prospects to be a tougher time than the '09 or '10, that's for sure.
Will all of this be enough? Tough to say, because it's also a long, long way from September to December.