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Retailers divide and conquer strategy

Tuesday, August 14, 2012 - 02:16

Aug 14 - Retailers are making the most of the polarization of the U.S. shopper, avoiding deep discounts by getting key products to the right customers. Bobbi Rebell reports.

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Shop windows like these at Michael Kors have been luring in customers. Kors' bet on affordable luxury has been right on target. Revenue was up 70 percent last quarter- in part because they didn't have to mark down the merchandise. Retail consultant Howard Davidowitz: SOUNDBITE: HOWARD DAVIDOWITZ, CHAIRMAN, DAVIDOWITZ AND ASSOCIATES (ENGLISH) SAYING: "That's the winning formula. If you can sell luxury and make it affordable- you win. And Michael Kors now has a huge emphasis on accessories which is the most profitable area in the business, so he has been brilliant." Higher up the income scale, Saks too said its sales were up and that it didn't have to mark down merchandise as much as planned. And discounter TJX, which owns T.J. Maxx and Marshalls said its sales jump was fueled by shoppers looking for inexpensive designer products. This polarization of the shoppers has become the new norm for retailers. While they aim for different customers- the post recession retail success stories have a lot in common. SOUNDBITE: HOWARD DAVIDOWITZ, CHAIRMAN, DAVIDOWITZ AND ASSOCIATES (ENGLISH) SAYING: "Retailing as an industry has done a great job in management. Close bad stores, dramatically cut costs, offering the customer more value." According to the government, overall U.S. retail sales increased 8- tenths of a percent in July. That's the biggest increase since February. PNC Financial Services Group's Gus Faucher: SOUNDBITE: GUS FAUCHER, SENIOR ECONOMIST, PNC FINANCIAL SERVICES GROUP (ENGLISH) SAYING: "Consumers can hold off on spending only for so long. You know if there are job gains, if there are wage gains, then they will feel comfortable going out and spending a little bit more. And so we are seeing demand pick up. You know it's not growing fantastically but the economy is expanding at around 2% on a year over year basis and that's enough to support job growth, that's enough to support hiring and that's enough to support growth in consumer spending." But consumers will spend selectively. Recently Kors competitor Coach saw its sales slow- when it tried to wean tight-fisted consumers off coupons at its outlet stores. Bobbi Rebell, Reuters.

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Retailers divide and conquer strategy

Tuesday, August 14, 2012 - 02:16