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When Will Sales Turn Around?
 

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The major retail chains reported their March sales recently, and the good news is that for the third straight month, there wasn't any really bad news. Sales were down slightly from a year ago, after being up slightly in February. Still, Easter was in March last year, so we are likely to see the impact of a later Easter this year in April sales.

The key point is that after free-falling in the fourth quarter of 2008, things appear to be stabilizing. Most smaller retailers are still afraid there might be another cliff just around the corner, but there's a growing sense that the worst might be over.

This has been a long and painful period. While the economists date the beginning of the recession to the start of 2008, many specialty retailers, who typical focus on higher-end merchandise, saw their sales start to drop as early as the spring of 2007. The S&P retail index rolled over in the summer of 2007, and by the fall of the year, the decreases had spread widely. The major chains that year started breaking price in late September, broke their Black Friday sales in early November and were in full clearance mode right after Thanksgiving.

Retail sales in 2007 were a leading indicator of things to come, and they are likely to be a leading indicator as we dig our way out. The challenge for smaller specialty retailers is that while they were the first to experience the downturn, by their very nature they may be the last retail sector to recover. While low-price driven chains like Wal-Mart and Costco have actually weathered the storm pretty well, for specialty retailers, the performance of retailers like Macy's, Penney's and Kohl's may very well serve as the leading indicator for a turnaround.

Still, even if specialty retail may be the last segment to recover, every small retailer needs to be pushing forward, bucking the headwind. Customers are still spending, but they are much more judicious. I believe strongly right now in marketing to your best customers, and building your customer base through referral programs, early previews, trunk shows, and other initiates to strengthen your relationships with your customers.

Last updated: Apr 17, 2009




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