For retailers in just about every segment of the U.S. economy, the year 2001 went down as the worst for business since 1990, with the impact of the September 11 attacks taking a heavy toll on an already struggling economy. As 2002 continues to unfold, however, the economy is in a much more favorable position for the second half of this year, according to projections from G.A. Wright Marketing Inc.
In his report, Retail Trends 2002, Gary Wright predicts that a turnaround
in the economy is coming, and when it does, we will find ourselves
in the midst of “a very strong growing economy with some great
opportunities for retailers of all sizes but especially for small
retailers.” In fact, Wright says retailers should start seeing
positive gains by this month followed by a very strong holiday selling
That’s promising news for the window coverings industry, but
in the meantime (and in the months and years ahead), retailers need
to take several factors into consideration in order to ride the
coming economic boom.
The result of the intense competitiveness of the retail industry
in this economy has resulted in consolidation, where marginally
successful companies are failing while successful companies continue
to grow, according to Wright. “In some cases the dominant competitor
in a market is growing through acquisition while in other cases
the dominant competitor is gaining market share by forcing weaker
stores out of business,” he says.
However, he points out that consolidation is not happening rapidly
in the furniture and home furnishings stores. This presents an opportunity
for retail growth over the next two decades in luxury items that
are sold with a high level of service—goods that depend on
a lifestyle niche. “This is important for smaller retailers
that want to escape the dominance of discounters and category killers,”
PRODUCT CYCLES, TRENDS
As new products enter the market, it is important to understand
the product life cycle and how it applies to the products that retailers
carry. Wright explains that when a product is first introduced,
mass-market retailers don’t typically have the sales staff
to sell new and innovative products that may have features and benefits
customers don’t know about or may not understand. Because manufacturers
of these products aren’t always able to supply chain retailers,
they are often best sold by independent, specialty retailers who
can take the time and effort to sell the product and are protected
by the fact that these products are not on the shelf at their large
competitors, allowing them to charge a price that will turn a profit.
However, once the product gains popularity and continues in its
life cycle, it most likely will become mass produced by the manufacturer
and sold at a lower cost by chains at a mass-market level, making
it a product that specialty retailers may want to discontinue selling.
Therefore, product cycle alone is not sufficient to compete; retailers
must also stay on top of trends, particularly fashion, Wright says.
More than just apparel, fashion obviously dictates trends in home
furnishings as well and is an important consideration that retailers
must pay attention to in order to remain competitive. However, Wright
points out that knowing what will happen in the fashion world is
much less important than knowing what is happening today. “The
cutting edge of fashion is not a place most consumers want to be
and is certainly not where most sales are made,” he points
The first retail companies to embrace technology early on were able
to use information systems to control inventories and improve efficiency,
giving them a huge advantage over their competitors. While some
smaller retailers may be reluctant to invest in new technologies,
Wright suggests that “it doesn’t take a huge advantage
to be very successful. Just being able to turn inventory marginally
faster and, therefore, sell it for slightly less, or being able
to react to fashion trends faster, or know which customers are most
likely to respond to specific advertising appeal, often is enough.”
In order to survive as a retailer, Wright adds, it is essential
to develop a strategy that focuses on price, merchandise or superior
service—all of which require technology. That means developing
a Web presence, which will become as important to retailers as a
listing in the yellow pages (if not more important). Even if retailers
don’t sell merchandise online, their Web sites should provide
customers with information, advertise specials and drive traffic
to the store. Remember, the retail store is the only place a shopper
can touch, taste, smell and try the product before buying, but the
benefits of using technology to bring customers in should not be
Wright concludes his report by pointing out that great successes
are to be had in the very early stages of an economic expansion,
so preparedness is key. He warns, however, that the risk most retailers
will face going into the latter part of this year will be “an
overly cautious attitude, under-buying, and consumer demand for
products that cannot be satisfied because of overly cautious buying.”
According to G.A. Wright, the boom is coming. Are you ready?
Retail Trends is a publication prepared by Gary Wright, G.A. Wright
Marketing, Inc., 4105 Holly St., Denver, CO 80216; (303) 333-4453;
fax: (303) 393-5320;
PLANNING AHEAD FOR SUCCESS
Regardless of exactly when the economy returns to normal or
booms, planning for the future is key to staying ahead of the
competition. According to Gary Wright of G.A. Wright Marketing,
Inc., in his report, Retail Trends 2002, the following
strategies should be helpful to retailers in the months and
years to come:
• Know your customers. Who are they? What media draws them?
Where else do they shop? What
products do they want? Answers to these questions, among others,
are key to luring prospective
customers and keeping current ones.
• Build strong relationships.
• Emphasize convenience, safety and comfort in your store
• Add value with information and tailored service.
• Customize your products and services.
• Train your sales force to be skilled and service-minded.
• Brand your store name in every facet of your business.
• Use available technology to improve your business and
stay up on the competition.
• Give customers a bargain and they will brag about it.
• Get out of businesses or product lines where you can’t