Sunday, May 25, 2008

Hunting for bargains

Many consumers are avoiding their usual retail haunts in fear of a recession, and are generally only going in to shop at their favorite stores such as The Limited, Macy's and Ann Taylor Loft, if there is a clearance sale. The new favorites of many consumers have become T.J. Maxx and Marshalls. According to analysts, off-price retail companies are undergoing a "customer-gathering mode" where they are receiving lots of first time visitors to their stores.

Not only are sales forecasts dismal for many retailers, discounters such as Wal-Mart, Ross and T.J. Maxx are seeing an upturn and did better than Macy's and Nordstrom. Most off price retailers sell brands that are also available at department stores, but at much lower prices. Wal-Mart is seeing people shop at its store who did not earlier, showing how consumer perspectives are changing.

About 85% of people with household incomes of more than $100,000 reported in WSL Strategic Retail's new How America Shops survey that they were already shopping at Wal-Mart at least once in the prior three months. WSL CEO Wendy Liebmann says that means the discounter is well-positioned to prosper in a sluggish economy.

"The door is already open to (higher-income customers); now they just may be spending more than they did before," says Liebmann, whose company's survey results will be issued this month. "These people are thinking, 'Why shouldn't I save the 20 cents on toilet paper, because it all adds up.' "

Wal-Mart is probably even better positioned than the off-price retailers because it doesn't rely so much on discretionary fashion and home furnishings. Rather, it's the largely recession-proof staples — food, health and beauty aids, cleaning products and other home essentials — that draw mobs to Wal-Mart.

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