Retailers Are Getting Makeovers {including J.Crew}

"Thanks!" to Anon at 3:05 PM (in this post) who shared with us an interesting article (click here for the article in its entirety):

Retailers Overhaul Business As Consumers Pull Back
By Anne D'Innocenzio
January 19, 2008

NEW YORK – For years, retailers could afford to be sloppy about running their businesses because customers kept buying. No more. Stung by the worry that shoppers — who cut spending by the most dramatic amount in at least 39 years this holiday season — may not start spending again for a long time, stores are making drastic changes. They are cutting out marginal suppliers, hiring outside experts to keep inventory lean, holding special events for those who are still buying and making extraordinary efforts to gauge customer satisfaction.

The new discipline will be mostly good news for shoppers, who will find stores less cluttered and see an array of products at lower prices, from ordinary groceries to jeans from brands they could once only aspire to.

Of course, the downside is that consumers who want something out of the ordinary — an olive green prom dress, for example — may have to look harder. Stores are rooting out offbeat, unpopular colors and styles, which will mean fewer choices.

Sales clerks are also checking back with customers to see if they're satisfied with their purchases.

"We are in a sea change," said Millard "Mickey" Drexler, J.Crew's chairman and chief executive and former CEO and visionary of Gap Inc.

Pricing goods within reach of strapped consumers is also a big focus, given the way nervous consumers have stopped shopping. Same-store sales, or sales at stores opened at least a year, fell 2.3 percent in November and December together, according to the International Council of Shopping Centers. And the worsening sales slump in January has many worried about the industry's prospects over the next few months.

J.Crew is working with its factories to adjust its prices on certain key items like ballet flats, which now start at $98 rather than $118. It's also stocking fewer of its high-priced items like $1,300 leather trench coats. It's cutting inventory and slashing expenses.

The biggest unknown is when or if shoppers will ever resume spending the way they did when the housing market was booming, credit was easy and jobs were more plentiful. ...

...Weaning customers off discounts is a big challenge for the industry, as people have gotten used to them — particularly on luxury brands that hadn't been discounted before sales all but dried up. ...

I am all for J.Crew producing less of items like the Lucido Coat (Item 96559; $1,800.00). ;) But in all seriousness, it will be interesting to see if consumers can "reset" their shopping habits. This past holiday season, shoppers saw some amazing prices and still hesitated to purchase (which is understandable given the current economic uncertainty).

What is your take on the article? Do you agree or disagree with any of the points made?