It’s beginning to look a lot like markdowns
Lots of retailers are reporting quarterly earnings this week. Macy’s got the parade off to a dismal start Wednesday, when it reported its third consecutive quarter of declining sales.
Add to that a lousy outlook for the next quarter, and the department store chain’s stock plunged 14 percent. There’s likely to be more weak results from other retailers, as inventories continue to pile up on store shelves.
There are lots of reasons retailers are hurting, including fewer foreign tourists and consumers’ growing taste for electronics and other goods. But Macy’s also laid a chunk of the blame on the warm weather, which has killed consumers’ appetites for cold-weather clothing.
“It’s something we all have to deal with and we have to plan for,” said Mara Devitt, a retail consultant with McMillan Doolittle. “Easier said than done, though.”
That’s especially true for department stores, which order hundreds of millions of dollars of goods every year.
“It’s a big challenge because if you’re a retailer with a physical location. Most of your sales promotion they’ve been pre-planned. Most of your inventory is already there,” said Alexander Chernev, a marketing professor at the Kellogg School of Management at Northwestern University.
For all the talk of fast fashion, many big departments stores still work on a calendar where they’re ordering merchandise several months in advance and then promoting it in preseason sales. Wool coats in September; tankinis in February.
But that schedule is out of sync with the way consumers shop, said Marshal Cohen, a retail analyst with NPD Group. “Progressive retailers have learned that the consumer today buys more on need than desire.”
And they desire cold weather clothing, for instance, when it starts getting cold.
Retail chains are trying to get more nimble by using data to manage supply and writing more flexible contracts
But, stores still need to stock a wide range of goods from silk underwear to toddler boots to Christmas tree oven mitts.
And, when those items don’t sell, the red pens come out and markdown season comes early…for all of us
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