Consumer Confidence Dropped. Now What?
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- by ROI Co-Founders |
- August 16, 2021 |
- COVID 19 |
As we follow economic indicators that particularly affect retailers, our primary focus always is consumer confidence. And the reports coming out this week give us pause.
- "The Consumer Sentiment Index fell by 13.5% from July, to a level that was just below the April 2020 low of 71.8," notes Richard Curtin, chief economist for the University of Michigan's Surveys of Consumers.*
- "The extraordinary surge in negative economic assessments reflects an emotional response, mainly from dashed hopes that the pandemic would soon end."
The highly transmissible Delta variant and the vaccine hesitancy of many have changed the momentum. Covid fatigue is back. This affects consumers.
And with it, more challenges for retailers. Decisions and policies may be needed regarding vaccinations, both for your staff and your shoppers. Meanwhile, consumers are likely taking another pause. Will schools reopen? Will offices reopen?
So, what's a retailer to do? What you always do: deal with it!
The advantage that independent retailers have is that you can move and adjust very quickly, being responsive to your local market. The Big Guys can't do this as well as you.
For instance, as you and your buyers review and adjust your buying plans, here are some reminders to keep in mind:
- To avoid being stuck with too much seasonal merchandise after Labor Day, start now to focus on markdowns.
- Remember the various online wholesale marketplaces that emerged and came to prominence during the pandemic. While some of them are featuring more major brands, they still offer access to many smaller vendors who can deliver smaller quantities in faster times, particularly of more unique product.
Most important, review our "Rethinking Your Merchandise Mix" (see chart above)
- Give some careful analysis to the proportions of "Basic", "Expanded Basic" and "Discretionary" merchandise in your stores now.
- Especially as you prepare orders for Holiday, Basics and Expanded Basics should predominate.
- Be very disciplined about Discretionary merchandise (and again, explore the online marketplaces for much of that.)
As you know, retailing never has been a "set it and forget it" operation. Instead, it demands your constant attention and especially, your resilience. But it does reward those who are steadfast about maintaining their flexibility.
One final thought: Be prepared to bounce back in another direction.
As Curtin observed, "In the months ahead, it is likely that consumers will again voice more reasonable expectations, and with control of the Delta variant, shift toward outright optimism."
* Preliminary Results for August 2021, Surveys of Consumers chief economist Richard Curtin, University of Michigan.