Study: Retailers to Cut X-mas Inventory, Discount More
For the 2009 Christmas holiday season, retailers will stock less merchandise and discount more heavily, according to a survey released by Forbes Insights, a research company, and New York–based financial company CIT Group Inc.
Retailers are preparing for a tough holiday season; 68 percent of retailers said they will stock less inventory compared with the 2008 holiday season, and 66 percent will offer greater discounts compared with Christmas 2008, according to the survey, “U.S. Small- and Middle-Market Outlook 2009: Retailers and Suppliers Take Stock of Economic Downturn,” which was released Sept. 14. However, the survey also offered optimism for the future: 46 percent of retailers expected their revenue to grow in the next 12 months. Still, 60 percent of retailers don’t expect consumer purchasing to return to the high levels of 2007 until 2011.
The Forbes/CIT study surveyed 110 executives from small- and mid-level retailers with revenues ranging from $25 million to $1 billion. The study also found retailers plan to spend the upcoming holiday retail season developing new sales markets, including 69 percent who said they hoped to increase sales through more aggressive e-commerce. Traditional sales tactics will be ramped up, too. A majority—56 percent—said they plan to advertise more aggressively than they did during the 2008 holiday season, and 66 percent planned to offer greater discounts than in 2008.
The study also showed how many retailers have weathered the economic downturn. Many larger retailers reacted by curtailing expansion plans. Smaller retailers typically cut costs by cutting overhead and staff.
According to the study, 44 percent of retailers surveyed reduced their staffs, and 42 percent did not open a planned store. Others reduced their spending on marketing, remerchandised their product offerings, delayed renovating stores, renegotiated their store leases, changed store hours, closed existing stores or borrowed less. A much-smaller number—13 percent—said they reduced their store size, and 5 percent said they filed for bankruptcy.—Andrew Asch
