Analysts concur with NRF when it comes to the “Buy Early” scenario, suggesting many could be out of luck if they wait until the last minute. Still, with no “must have” items in the market this year, it may be tough to convince the consumer that retailers have actually changed their behavior from years past when they loaded up for the season and started marking the good down early.
“Consumers will see fewer deals by waiting it out,” said Diane Swonk, chief economist at Bank One in one published report. “The discounts will be there, but the selection won't be. The closer you get to Christmas, the less you'll see of all-out dumping of merchandise.”
We see some shift in the sporting goods industry — and not just for the holiday season — as others look at the very successful models at Dicks Sporting Goods and Hibbett. The retailers are doing more with less and the consumer appears to like to ability to actually walk between racks to get to product they can purchase. Expect to see more SKU count reduction at other retailers as they pare down vendors, focus on key items and build in systems to react more quickly to sales opportunities.
The same holds true in the broader retail environment, with retailers are stocking less merchandise and managing their inventories more carefully so they won't be stuck unloading products at rock-bottom prices as the season ends.
JC Penney is one other retailer that has focused its inventory on key items they see in higher demand.
“We disciplined ourselves to limit our assortments to the more popular items,” said Christi Byrd Smith, a company spokeswoman in the Atlanta Journal-Constitution article. A popular sweater, for example, won't be available in a dozen different colors they said.
This focused effort on maintaining tighter inventories is the new reality. We see a bit of a paradox here as many of the same retailers that are narrowing assortments are also moving to increase their percentage of private-label business. We wonder why the same retailers that pull back on pre-season commitments to branded merchandise also load up on the front-end of the season with the private label goods. Is it all about IMU, or should we be focused more on the maintained margin over the whole season? Food for thought.
