But opportunities exist for midlevel retailers, too. If shoppers are trading down to Wal-Mart, as its sales suggest, then more affluent people may be ready to cut back on their Bloomingdale's trips in favor of Kohl's kss. Tough economic times tend to diminish loyalty to stores across the spectrum.
"In this type of economy, the super shoppers get coupons out and check things online; they're going to be loyal to themselves first," says Phil Rist of the consumer insights firm BIGresearch. "Everyone's trying to find ways to make their money go as far as they can so there's something left for things they really want."
Christopher Maddox of Washington, D.C., says he's not giving up on Macy's m, one of his favorite retailers, but is being far more cautious about his purchases this year.
"I'm only buying essentials due to the economy," Maddox says. "Luxury and big-ticket items are not in my budget due to increased costs of gas, food and utilities."
What follows is a look at the strategies of four retailers — Target tgt, J.C. Penney jcp, Macy's and Neiman Marcus — that draw from often-overlapping segments of shoppers.
As they brace for a possible recession, these stores are re-examining, in particular, four areas that will be most evident to shoppers: inventory, staffing, store openings and promotions.
Damn the economic naysayers, J.C. Penney is designing its most ambitious five-year plan for store openings in its history and last week oversaw its largest-ever merchandise launch. Still, facing a persistent drop in consumer spending, CEO Mike Ullman says the chain is scaling back those store openings from 50 to 36 this year and will adjust its inventories to reduce the need for hefty markdowns.
Ullman hopes that Ralph Lauren's new American Living fashion, home and footwear line for men, women and kids will further invigorate the Penney brand, which has drawn more and younger customers with the addition of the Sephora makeup line and two private-label lingerie lines designed, in part, to compete with Victoria's Secret. The American Living line will be found in 600 of the chain's 1,000 stores, often with its own in-store shops.
Deutsche Bank senior retail analyst Bill Dreher questions whether now is a good time for Penney to launch a line that's about 25% higher-priced than similar merchandise already in its stores.
Under the deal, Ralph Lauren's name won't appear anywhere on the new merchandise or displays, Dreher notes. Kohl's, by contrast, was able to connect the Lauren name with its Chaps line for many years, which helped keep customers aware of the connection. The new line is "no panacea," he says.
Still, Dreher notes, Penney has successfully reinvented itself over the past decade from a chain known for "dowdy, older-lady-type fashions to one that's very much hip, on-trend and cool." More recently, Penney has recognized that its catalog business is less important now than its website, he says.
About six months ago, Penney decided to merge its store, catalog and online marketing operations; the change will result in 100 to 200 job losses. Ullman insists it's "not a cost-driven exercise," but rather one that'll give shoppers "one view of our merchandise."
"People expected us to have cost-cutting, but that's not how you grow a business," Ullman says.