Nation’s Retailing Picture to be Dim in 2009

Don’t expect the nation’s retailing picture to improve through most of 2009, says Dr. Kristy Reynolds, Bruno Associate Professor of Marketing in the Culverhouse College of Commerce at The University of Alabama.

Reynolds, who has done extensive research in retail loyalty, shopping motivations and behavior, and customer-salesperson relationships, says all of those areas will be major factors in retailing success in 2009.

Reynolds said the signs of tough retail times include a double-digit increase in purchases of private label (store brand) goods, and an increase in the purchase of staples over discretionary items.

“And there was a recent report that many Americans are cutting back on their prescription drug purchases,” Reynolds said.

Reynolds said she expects consumers in 2009 to curtail discretionary spending and put a greater emphasis on quality and maximizing value. She also expects declines in product areas in which consumers can delay purchases, such as some appliances and clothing.

“With the growth in personal consumption spending expected to be negative in 2009 because of credit curtailment, increasing unemployment and job uncertainty, retailers will be offering more value-oriented products, products that bring more bang for your buck,” Reynolds said.

“I think those retailers that over the years have come to be recognized as offering products that last will have a better chance of surviving through the faltering economy,” she said.

She also said we can look for more retail consolidation in 2009 as the stronger stores gain share and weaker stores fall out of the marketplace.

“We have already seen a significant number of store closings in 2008 following several bankruptcies, and I think we can expect many more store closings after the holiday season, as retailers close underperforming stores or as more bankruptcies are announced.”

And while gas prices have dropped, Reynolds said there will still be a segment of shoppers who will do much of their shopping online. “This year, good deals and free shipping will be more important,” she said.