Fallout: The Financial Crisis

Prices fall, if inventory has to move

Jeremy Hobson Dec 26, 2008

TEXT OF STORY

KAI RYSSDAL: If you spent some of today doing some old-fashioned brick-and-mortar shopping, you probably saw some pretty incredible deals. Retailers across the country are cutting prices to drive sales and make up for their run of bad luck this holiday season. They’ve got to get inventory out of their stores to make room for the new stuff. But those lower prices aren’t across the board. Certain items, you may have noticed, are selling at the low, low price of . . . full price.

Marketplace’s Jeremy Hobson has more.


JEREMY HOBSON: There are a few things at play when it comes to which items are being discounted, says Kathleen Seiders, a marketing professor at Boston College.

KATHLEEN SEIDERS: One has to do with the chain itself — the store or the company — how its sales have been.

And for most, sales have been disastrous.

SEIDERS: The other has to do with the type of merchandise. Whether it’s more utilitarian. Because, if it’s more utilitarian, then those companies don’t have to be in such a rush to get those products off the shelf.

For instance, stores selling kitchen goods can hold their inventory and sell it later. That’s why the copper stockpot at Williams-Sonoma still costs almost a grand. Clothing stores, meanwhile, have to make room for the spring lineup. And Seiders says that means some painful discounts.

SEIDERS: If you’re looking at a 70 percent discount, chances are the company’s losing money on that product.

A sign of things to come, perhaps. Seiders expects a wave of layoffs and bankruptcy filings in the retail sector after the New Year.

I’m Jeremy Hobson for Marketplace.

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