Retail Economics 101: The Balancing Act
Most of my purchases are based purely upon impulse. Here lately, these impulses have become less frequent (not really), but increasingly more expensive (really)!
As I understand it, during a recession, the goal for most retailers is to maintain their current levels of income or profit. However, this strategy might even be difficult, because input and inventory prices are rapidly rising (manufacturers, distributors, etc are also facing tough times). With this goal in mind and operating costs increasing, it is intuitive to raise consumer prices.
But, according to Meghan O’Brien, Department of Economics at my alma mater,
…these increases cannot simply or universally be passed on to consumers…Pricing goods based on their elasticity is a smart retail strategy during a recession…the lesson for a retailer is not to raise prices on those goods that your customer can live without or go down the street and purchase in a less expensive form.
Managing inventories at a profit maximizing levels is difficult for retailers in a recession, but critical for success. The wisest retail strategy under the circumstances is to order the minimum necessary to sustain existing demand—an ample amount of staple items, which sell frequently, and fewer of those more expensive, non-essential items. Unsuccessful attempts result in reducing excess inventory via sales and losing consumers to competitors when there is a shortage.
O’Bien’s tips for shoppers:
1. Now is a good time to be a consumer. You might have less money to spend, but retailers want your money more than anytime in recent history. Take some time to shop around for the best prices and services.
2. Your dollar is your vote. If you really enjoy shopping at a local retail store, don’t expect it will be waiting for you to come back if you switch your spending habits. Choose where you will spend you dollars based on whom you would most like to continue doing business with.
3. Be reasonable about where you travel to shop; try to maximize your savings per trip.
4. Limit credit card use. Retailers may be running great specials but stocking up at 70% off isn’t saving you money if the balance stays on your credit card for multiple billing periods.
O’Bien’s tips for retailers (among others):
1. Don’t assume raising prices will keep your revenue stream stable during a downturn. The price elasticity of the goods you sell will determine whether you can raise prices or not. DO NOT raise prices on highly elastic goods as this will reduce the quantity demanded dramatically! (emphasis added)
2. Listen to your customers; they are your greatest asset.
Based on the article Retail Economics 101: Lessons and Strategies of a Recession
NyC Fashion Week: Fashion’s Night Out Recap
Arriving in NyC
Fast forward to night 2 (first night us girls just caught up on some gossip), Fashion’s Night Out!!!
We had our guide:
Started out on Seventh Ave. in Chelsea
A little wine and cheese before heading out
Went over to the Meatpacking District-Party @ Tory Burch. Apparently Russel Simmons was there at one point.
Then went around the corner…
Ingrid shopping for glasses @ Kenneth Cole
Window shopping…
Crazy people and mad paparazzi @ Stella McCartney. Kate Hudson was on her way…
We didn’t want to stand in line, so we headed over to DVF
Where Diane and Anna chatted it up
And Diane posed for a pic with us
We were hungry from all of the shopping and partying so we went back to Chelsea to the Cafeteria. AMAZING food! There’s always a line, even at like 4 am.
I had the chicken and waffles
When Fashion and the Law Collide: American Apparel (Again)
American Apparel, the largest garment manufacturer in the U.S., and “arguably the most vocal” in speaking up against U.S. immigration policies, is terminating about 1,500 employees at its Los Angeles factory, because they were unable to prove their immigration status or fix problems with their employment records. This after a government inspection uncovered that close to 1,600 of the manufacturer/retailer’s workers didn’t appear to be authorized to work in the U.S.
The debate over how a country built on immigration should manage its new immigrant workforce exploded into mass demonstrations in several major cities in 2006. American Apparel was a leader in the campaign to legalize foreign workers, saying that it is good for business.
Policy overhaul efforts failed in Congress in 2007, and both presidential candidates said they supported humane reform, but kept quiet on the subject in the months leading to the election on November 4, 2008. The dramatic tailspin of financial markets and the slowing U.S. economy has pushed the immigration issue even further into the background, a situation that American Apparel has tried to challenge.
Large workplace sweeps by U.S. immigration police hit meat-processing and electronics plants across the country in late 2008, and Homeland Security released a list this past July of 652 businesses nationwide that would receive audits (I-9) of its workforce. American Apparel was one of them. The company has never been raided, but it has had to let workers go whose papers are discovered to be false in the past. An attorney working for the company on the audit said the results showed no wrongdoing by the company.
Despite the dismissal of more than 10% of its workforce, AA doesn’t expect problems with productivity, since, well, “the confluence of several factors including the slow economy and high preexisting inventory levels,” said the attorney. So what does that mean? Get your bootys over to American Apparel and buy something!
New York Nights Are In Vogue
I’m headed to New York in a couple of weeks. So geeked! I haven’t been in far too long. I rarely make plans to do anything in particular when visiting a city, and am not much into site seeing, but there are couple of things this time around that Idefinitely want to do. I definitely want to hit up the not-so-new anymore Topshop.
It also so happens I’ll be there during fashion week. And, if you haven’t heard (you had to have been under a rock), on Sept. 10, in a global initiative to promote retail, restore consumer confidence, and celebrate fashion, U.S. and international editions of Vogue are coordinating evening extravaganzas in their respective world fashion capitals.
In the United States, American Vogue has joined with NYC & Company, the City of New York, and the Council of Fashion Designers of America to enliven again the consumer spirit that churns the economy and boosts the local industry of America’s fashion capital, New York City. Next only to finance, fashion is the second-largest sector of industry in New York City—the headquarters of more than 800 fashion companies employing 175,000 people and generating $10 billion in total wages. At City Hall’s May 20 press conference to announce Fashion’s Night Out, Vera Wang said, “To put it bluntly, if people don’t shop, people lose their jobs.”
The first evening of New York Fashion Week, Fashion’s Night Out will encompass festivities galore— from inventive window displays to model and celebrity appearances. Champagne may flow; hors d’oeuvres may be passed. Rumors of musical performances, downtown barbecues, shoe capsules, limited-edition rings, and sweepstakes abound. Apparently there will be makeovers, brow bars, and haircut stations at sundry spots, too. Source
Also, in theatres will be The September Issue, the documentary feature film of the legendary editor-in-chief of Vogue, Anna Wintour and crew. The September 2007 issue of the magazine is said to have weighed five pounds, the single largest issue of a magazine ever published (literally). The film was directed and produced by R.J. Cutler.
I of course, being the fashion fein that I am, want to see the film while I’m in NY (call me cheesy, but in my defense, it probably won’t make it to theatres here in the city, so …).
Since were so in Vogue today, don’t forget to catch the Head Diva in Charge, Anna Wintour, on David Letterman on Aug. 24th. She is everywhere all of a sudden. I don’t think it’s a coincidence. I am in the middle of Anna’a biography by Jerry Oppenheimer, and from what has been written, Anna will fight for her territory. If she has the slightest feeling that her position is being compromised, which is my suspicion, she’ll do what she has to in order to keep it. I think that has meant allowing the unprecedented access for the documentary, making appearances and giving interviews on 60 Minutes, Letterman, etc. I’m not exactly sure what it is. But, something’s going on over there. Mark my words.
I got MINX-ified!
I have been polishing my nails since my prissy little girlhood. I LOVE bright colors and the occasional design, but I have never really been impressed by the airbrush or dot-dot-dot, swoosh, swoosh that the nails salons often offer. Lately, though, I have had to cut back on my frequent visits to the salon for a quick polish change, and I’m too lazy busy to keep up with them on my own. Then I found out about Minx “nail fashion” (admittedly later than I (and you) would have liked). It’s a nail covering, not a polish, and comes in a range of colors and designs. Minx doesn’t smudge or chip. And, it lasts a long time! Problem solved. Minx products and professionals are available only at select salons.
What does a Recessionista Drive?
My car is on bended knee, begging me to get front wheel bearings and rear struts, over $800 worth of work. I just spent over $1100 a few months back. I really want a new(er) car. But, I can’t afford what I want (a Cadillac SRX), and until now, I have been unwilling to compromise. The question is what does a recessionista drive?
It’s A Bad Day to be a JD
The folks over at Above the Law are reporting shocking numbers of lawyers who have been let go from their firms and entering first year associates who’s start dates have been postponed (all the way to 11/10) or who’s offers have been revoked! A variety of alternatives have been employed to retain summer programs, such as hiring fewer students and shortening summer programs. However, some firms have cancelled their summer program entirely!
Sheesh! Thank God I don’t work for a firm. The future of in-house legal counsel is for now, uncertain; my job could be in peril. Note to self: Hope for the best. Plan for the worst. Rid thyself of those shopaholic ways!!!!!!!!!!!!!!!!!
Trend Alert: Denim
Kanye West knows. He and his new lady friend, Amber Rose, who I’m keeping a close eye on( I’m kinda diggin her style), were both seen wearing denim all over NY Fashion Week. Actually, I don’t think Kanye took his off all week.
Anyway, apparently anything goes. Denim on demin, light on light, dark on light, light on dark, you get it. But also, skinny, baggy, straight and wide leg, harem leg (think Aladdin), shorts, dark, faded or stonewashed… And, they’re everywhere and at every price point. See for yourself: Jean Jackets, Acid Washed Jeans, Distressed Levis, Destroyed Demin Shorts
Alexander McQeen for Target in stores Now!!
March marked the debut of Target’s Designer Collaboration initiative, which focuses on offering affordably priced designs by established designers, whereas the Target Go International focused on emerging designers. Alexander McQueen is the first designer for the initiative, and the line will be based on his secondary line McQ. Yay!
According to WWD, the line
Will feature lightweight sweaters, skinny jeans, bubble dresses, slim skirts and cuffed shorts. Signature pieces include a coated cotton poplin black trench, a rock ’n’ roll gray denim cropped studded jacket, a men’s wear-inspired tuxedo blazer and a color-blocked one-shoulder dress with bubble hem. The collection also will include swimwear and cotton voile print scarves…
The collection has a muted color palette of black, white, gray and tan with accents of cobalt blue and bright pink. Studs and mesh give items an edge. For example, a chambray sleeveless shirtdress has stud detailing, there’s a mesh wrap dress and an open yarn zipper cardigan. Graphic prints and silk-screen photographs give tunics, dresses and T-shirts visual interest…
The is in stores for a limited time.
Commentators wonder what a collaboration like this means for the designer. What are a designers motivations for offering designs in which they must lower the price and arguably, the quality? One Commentor wrote:
As a middle class consumer, It would be nice to be able to actually afford some of McQueens art. However, it seems to take a certain tole out on his name. In the means of quality, as well as the title of high-end merchandise goes, the department store chain by the name of Target is not nearly what I associate a name like Alexander McQueen with. I feel as though the only designers that should produce any merchandise for a department store like Target are ones that are unheard of, or are “starting small” to say. I don’t see why lowering the quality and styling of a piece should be compromised so a designer can sell his work to the general public. It almost isnt even the same work, certainly not the same luxury, which is partially what McQueen is known for.
I tend to agree, but I’m going to check it out anyway.
Recession turns Shopaholics into Swapaholics
With the current economic situation, it’s no surprise that many shop-a-holics are being forced to shop-less.
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