Sunday, January 11, 2009

Retail that Works

Listening and reading retail news reports, what seems to work in retail during a recession is:

  • Kids stuff. Parents cut back on things for themselves before they deprive their kids, so kids stuff is cut out last. The caveat on this: within this category, unnecessary kids stuff like toys and luxury brands are dropped in favor of practical things, like well priced clothing and educational items.
  • Home stuff. People spend more time at home, so home furnishing stores and decorators apparently do well. If you're not going out as much, and I'm certainly not, it makes sense to make your home a little more livable. If you're unemployed, you're spending more time at home too.
  • Hobby stuff. Similar to home stuff, hobbyists, if their hobby isn't too costly, tend to continue spending. The "lipstick effect" basically says people will continue to treat themselves, but with less expensive items.
I mention this because if you read the news, as usual, it's doom and gloom with more problems on the way. Meanwhile, those positioned properly are doing fine, or have seen jumps in sales. Aeropostale, a seller of cool but inexpensive teen clothes saw their sales climb 12%, while their higher priced competitors did poorly. Hot Topic, the ultimate "lipstick effect" store saw a 4% jump. GameStop had a 10% jump in sales, citing the high entertainment value of video games and predicting revenue increases of 15-20% for the next three years. Hobby game stores in the Bay Area talk of record sales days in December as well. Since we sell hobby stuff that you play at home with your kids, I think we're positioned just fine for the coming year.

1 comment:

  1. At my job enough people have quit (yeah, I don't get it) that I have more work than I can handle. I am actually doing better than I was last year at this time thanks to overtime and lack of job stress.

    Not everything is gloom and doom.