Today’s lousy July retail sales results are being blamed largely on clunkers and houses. Specifically, people who are paid to have opinions – including investment bank analysts and academics – are saying Americans bought cars via the Cash for Clunkers program in July, or splurged on new homes, or both, rather than going to the store. Huh? I buy another explantion: empty store shelves. Since the economic crisis hit, the country’s retailers have slashed inventories. If you manage a store, there’s just no upside to keeping shelves brimming with stuff when your gut tells you it won’t get sold. Problem is, when customers do show up looking for a new toaster or microwave only to find one or two (or no) choices – they’re outta there. This was our experience after moving back to the U.S. in June after many years abroad; we couldn’t find what we needed so we didn’t buy. We waited. Or we ordered online from Amazon. Back-to-school sales will be similarly stricken if retailers similarly refrain to stock up on pens, pencils, notebooks, bookbags and tween fashions for middle school girls. As for Christmas sales – let’s not go there. It’s still summer, for Pete’s sake. Here’s what DJN colleague Karen Talley writes:”Retailers said they felt impacts from tax-free holiday shifts to August from July, which crimped year-over-year spending. They also had less inventory, which meant less clearance selling. Among categories, apparel, home and garden and electronics were cited most as seeing soft demand.” By the way, my skepticism about clunkers and houses (I just don’t believe people are buying cars and houses and not going to Wal-Mart) is matched by a disbelief about another explanation being proffered by retailers – that cooler weather kept people out of their stores. This makes little sense. Weather cuts both ways in the retailing biz: If it’s hot, people take refuge in air-conditioned shops. But if it’s cool, people don’t go to their community swimming pool – and with time on their hands, they head to the store.
5 Comments to Retailers’ Empty Shelves
Gabriella SternAugust 7, 2009
Excellent point. We may in fact see a further shift to online buying as a result of inventory reductions. Thanks for your comment. Gabby
Leslie StomporAugust 7, 2009
I’m glad to see that someone else has noticed this! As long ago as last Christmas, I marvelled at the gleaming shelves in the local SuperTarget’s toy section, more than a WEEK before Christmas!
I get that stores don’t want to be stuck with inventory, but you can’t sell what isn’t there, either. Plus, you get frustrated customers. And, in the case of toys, they will sell throughout the year for birthdays.
In the end, you will see shifts in behavior — either folks will go online (I send people to my kids’ Amazon wish lists for ideas on what to buy!), or they will buy VERY early in the season, fearing (possibly correctly) that if they wait, it will be gone when they go back.
In the end, the bricks’n'mortar stores will have lost a sale. I guess the bean counters don’t have a way to measure that, though. Alas.
Bob ContiAugust 7, 2009
Have to disagree with part of the comments: As an ex-retailer, I can tell you, weather is a huge factor in apparel sales. Cool weather? There go your swimsuit unit sales. Unseasonably hot weather? There go your outerwear and sweater sales. When you are inventoring seasonal categories of merchandise and the weather doesn’t cooperate, you must take markdowns to clear for the next season’s categories. Cooler weather? You have to pull off all those air conditioners off the floor, tying up dollars, till next year…and hope for Heat and plenty of it!!
Gabriella SternAugust 8, 2009
Aha! Thanks for explaining this. Best, Gabby
August 6, 2009
It’s interesting what you said about waiting and eventually going online to purchase. I have encountered the same thing all summer when searching for specific things to buy. Everywhere – low inventory and limited selection. I also was forced to go to internet to find and purchase exactly what I wanted. For traditional brick and mortar retailers, this is a viscious cycle. Could we have a permanent shift in the purchasing patterns of the American consumer? I like to go physically (to a store, as do many) and get it now, but I am getting used to having to purchase online and wait to get exactly what I want. Talk about a cure for impulse buying!!I have never thought so many purchase decisions completely through BEFORE buying. I must admit that I have purchased a good bit less as a result.