An economic slowdown tends to spook the retail industry. When the economy sputters, people close their wallets and delay purchases, and stores suffer. Store chains, after all, can't survive very long without robust consumer spending.
But retailers don't just stand there and take a beating. They slim down, shut stores, trim inventory, slice payroll and take other strategic steps they hope will help them endure the pain. Some stores even thrive in recession even as others struggle.
With fears that the coming months could be the toughest for them since the 1991 recession, retailers are fighting to gain any edge they can over their rivals and to cushion themselves from the slide in customer spending. Many of them are redeploying staff and revising promotions; some are putting a new stress on low prices. In the end, they know, some of them will be winners, others losers.
"I see clients being more aggressive about promotion and reviewing the strategy by which they promote and how often they do it," says Madison Riley, a retail strategist with consulting firm Kurt Salmon Associates, whose clients include most major retailers.
The stores' strategies vary. So do their prospects for success. Much depends on how vulnerable they are in the first place.
Retailers that specialize in furnishing or refurbishing homes have been among the hardest hit. Specialty stores with highly discretionary products, such as the high- and low-end tchotchkes sold by Sharper Image shrp and Lillian Vernon, respectively, may be worst off of all. Both retailers filed for Chapter 11 bankruptcy protection last week.
Specialty apparel stores are struggling, too. Even though some clothing, especially for growing kids or for career women, is regarded as essential, sales figures suggest that many of those purchases are being postponed.
Home Depot hd has slashed 500 jobs at its headquarters. Jewelry store chain Zales zlc has announced plans to close 60 stores, and Ann Taylor plans to slash 180 jobs and close 117 stores within two years.
"The retailers accept that we're in a recession — smack in the middle of it," Riley says.
Among the most visible ways that stores are trying to ease their pain from the spending slowdown:
•Merchandise. Retailers must take care not to stock too little of the latest hot fashion or product — or showcase it too late. Many stores, Riley says, are working more closely with overseas suppliers to settle quickly on designs and shorten the development process.
•Pricing. Even retailers that try to avoid across-the-board price slashing are embracing the deep discounting trend, which Wal-Mart capitalized on so successfully last fall and holiday season.
•More consumer input. Retailers can't afford to wait until the end of a season to determine which trends will prove most popular. Riley says stores are stepping up consumer research and using their websites to gather real-time opinions from shoppers.
Thanks to luck, foresight or a bit of both, some retailers are better positioned to manage a downturn. Those with low, low prices — think Wal-Mart wmt and off-price retailers including T.J. Maxx tjx— and those that cater to the wealthy are tending to outperform those in the middle.