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Online sales rising despite economy

Marketplace Staff Apr 9, 2008

TEXT OF STORY

Scott Jagow: A new survey from Forrester Research predicts online sales will climb 17 percent this year. That’s despite the current economic climate. That spells trouble for the old brick and mortar. How do stores intend to fight back? By raising prices! Lisa Napoli explains.


Lisa Napoli: Would you rather pay 39 bucks for a pair of pants? Or $200? Apparel players like J. Crew, Ann Taylor and Banana Republic are betting you want to pay more for what you wear. They’ve all been launching new upscale lines that charge up to 40 percent higher prices. Levis said this week it’s pushing new premium clothing around the world. Retail analyst Kurt Barnhard says even in a down economy, this adds up.

Kurt Barnhard: Well, it isn’t that difficult to understand. The retailer today must if he wants to stay in business come up with new and exciting things. Relatively upscale merchandise has a tendency of finding a lot of favor with consumers.

Barnhard says the introduction of higher priced merchandise could be exciting for another reason: the bottom line. It’s easier to show fatter profits if you’re charging more for the merchandise.

In Los Angeles, I’m Lisa Napoli for Marketplace.

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