Retailers Face Challenges in 1999
.c The Associated Press
By RACHEL BECK
NEW YORK (AP) -- Gray is more than this season's hot fashion color. It's what retailers see when they look to 1999.
The only thing that's black and white when it comes to shopping these days is that there are too many stores and not enough buyers. While retail space has grown by almost one-third in the last decade, consumers refuse to spend freely.
Merchants face blurring lines between stores, catalogs and the Internet, between keeping up with the trends and offering something unique, between holding costs down and keeping customer service up, between offering competitive prices and making a profit.
''Retailing has become a very crowded atmosphere,'' said David Rush, who works at the Atlanta-based retail consulting firm Kurt Salmon Associates. ''You have to give consumers a reason to shop at your stores and distinguish yourself from the rest.''
So while the buying and selling of goods is as old as civilization, retailers are heading into the new millennium facing the challenges of new technology while still trying to sort out old problems.
Look at the Internet. Retailers can't ignore the fact that online shopping is increasing in popularity at a faster pace than ever expected. But many merchants still worry about how to deal with this new sales outlet.
Should they offer the same merchandise as in their traditional stores and catalogs? Will prices be comparable?
''Initially, there was some hesitancy about the Internet,'' said Wendy Liebmann, president of WSL Strategic Retail. ''Now, they are thinking that they better get on the Internet or they will miss the boat.''
They are also struggling with what to carry in their stores. While department stores have long been the haven of designer labels, shoppers complain that they all look the same, dotted with Tommy Hilfiger, Ralph Lauren and Jones New York.
Since they can't throw out the trendy brands that are the backbone of their business, more merchants will look to increase the number of exclusives they get from popular manufacturers -- from toymaker Mattel to women's designer Tahari.
As for profits, retailers are obviously concerned with boosting the bottom line. But many need to clamp down on discounting to do so. That's difficult given that many chains use sale promotions to woo shoppers to their stores.
''I've never seen anything like this before. There are so many gimmicks,'' said Isaac Lagnado, who works at Tactical Retail Monitor, a retail consulting firm. ''It can't continue like this.''
Meantime, discount chains like Wal-Mart and Target report some of the healthiest profit growth in the industry because they offer low prices year-round instead of constantly driving their business through promotions.
Customer service also is problematic and there is no easy solution. As stores slashed expenses in recent years, they also cut their sales staff. Consumers, in turn, face long checkout lines and rarely find help when needed.
While shoppers aren't willing to pay more for more salespeople, they still recognize the value of good service and are loyal to those stores that provide it, like Nordstrom.
''You can lose if you don't have service,'' Rush said. ''I'm not sure how many people go to the store looking for it, but they appreciate it once they get there.''
And one new issue confronting retailers has them seeing red as they look ahead -- the Year 2000 bug. The meltdown that could arrive if computers read next year as 1900 has already caused some problems with valid credit cards being rejected as expired. Retailers also rely on computers for their payrolls and their inventories.
''The Y2K problem could be one of the biggest headaches of all for retailers,'' said Carl Steidtmann, chief retail economist at PricewaterhouseCoopers.
AP-NY-12-31-98 1313EST |
