If you read through recent transcripts of earnings calls from retailers, you’ll notice one word coming up a lot: “conservative.” Conservative in the business, not political, sense.
“We’re going to be conservative on inventory.” — Abercrombie & Fitch executive
“We will continue to plan our businesses conservatively.” — Urban Outfitters executive
“I think everybody’s taking a pretty conservative approach from an inventory standpoint.” — Dick’s Sporting Goods executive
Going into the fall and the holidays, retailers are being cautious about what they buy.
They’re trying to avoid a repeat of this spring. When the pandemic hit, sales plummeted, and retailers had a ton of inventory left over that they paid for but couldn’t sell. They had to offer steep discounts to get rid of it.
Craig Rowley, a senior client partner at consulting firm Korn Ferry, says when you do that, “you can lose all the profits you’ve gained through the whole season.”
This time around, with all the uncertainty, retailers are just buying a lot less. Sonia Lapinsky, managing director at AlixPartners, said it is a risky bet because if retailers are wrong, they could miss out on potential sales.
“This is their peak selling season, and given such a year of turmoil that we’ve had, it’s really risky for them to run out of stock and just miss that top line,” Lapinsky said.
Lapinsky said some shoppers will likely be disappointed this year — and find something that they want is sold out. There’s no historical precedent here: Retailers can’t just look back at last year’s sales and know how many winter coats or patio heaters or sleds to order. We’re in a new reality. So they’ve been making a lot of guesses.
“You know, what are going to be the hot items? What are going to be the things that consumers really want? And likely, [retailers are] just not going to have the right bets in all cases,” Lapinsky said.
COVID-19 Economy FAQs
So what’s up with “Zoom fatigue”?
It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.
How are Americans spending their money these days?
Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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