Retailers Try To Get The Price Right
ALEX COHEN, host:
And now something a bit less depressing, you can still save money at plenty of stores. Retailers continue to offer discounts at 50, 75 even 80 percent off during this recession. While these sales may help stores stay in business, some are wondering if shoppers will be willing to return to paying full price when the economy gets better. Kaomi Goetz reports from New York City.
(Soundbite of people talking)
KAOMI GOETZ: Shirley Harrison is all smells and laughter carrying shopping bags on each arm. She's just outside Macy's Department Store in Midtown Manhattan. The shopper from Queens just scored in retail terms.
Ms. SHIRLEY HARRISON (Shopper): Oh, I found me some 300-and-some-dollar shoes, and I've got them for $98. I've got me some Angel(ph) perfume, oh you've got to try Angel. It smells delicious. Smell it.
GOETZ: Another woman who would only identify herself as Heather from Montana, had to set down her bags to hail a cab. She says the 75 percent off discounts work.
Ms. HEATHER (Shopper): It's getting people in there.
GOETZ: Is it? What did you get?
Ms. HEATHER: I've got a coat and a couple of shirts.
GOETZ: And do you think that you're not going to want to go back to paying full price after…
Ms. HEATHER: Definitely not. No.
GOETZ: And the reason? It's the uncertain economy and a newly wary American consumer. That consumer spent more in January than in past months, but she also did something unusual. She put money into savings.
Mr. SIMON DOONAN (Creative Director, Upscale Barney's Department Store): The fashion system could use a bit of a reset.
GOETZ: That's Simon Doonan. He's the creative director of Upscale Barney's Department Store. He says getting people in the doors isn't just merely about beautiful clothes. It's about buzz.
Mr. DOONAN: And as a retailer, you know, at Barney's which we are constantly trying to create Simon about what is in the store right now because that's what the consumers can buy. So for us fashion isn't a theoretical excise in hoopla, it's a financial transaction.
GOETZ: And not likely a cheap one. A pair of fuchsia Manolo Blahnik pumps with a razor-thin heels will set you back $600. To get you to part with the cash, Barney's is ramping up a marketing campaign to appeal to a shopper's sense of individuality. But even at Barney's where paying full price can be a bit of status symbol, Doonan admits the discounting craze is putting on the pressure.
Mr. DOONAN: The sales syndrome is something that you know, you have to participate in it, but it's a double-edge sword.
GOETZ: That's because consumers are now becoming so used to the deep discounts they may not go back to paying full price, ever. Retail analyst Howard Davidowitz says the times have retailers on the rails.
Mr. HOWARD DAVIDOWITZ (Retail Analyst): We're in the biggest trade down effect in the history of American retail. Saks Fifth Avenue lost a hundred million dollars last quarter. Neiman Marcus bonds are downgraded. Barney's is up for sale. Nordstrom's bonds are down graded. Massive sales fall off. In Bergdorf across the board we're closing 2,000 jewelry stores.
GOETZ: Davidowitz says part of the problem is the change in American living standards. For decades this was propped up by almost limitless credit. People borrowed to pay for things they wanted now. But with credit dried up, Davidowitz says, so too has the retail bubble. Where stores used to do the dance of marking up a $500 Kashmir sweater to 700, only to turn around and sell it at a discount of $600, Davidowitz says those kinds of games no longer work.
Mr. DAVIDOWITZ: The American consumer is saying, I'm going to buy a cashmere sweater, I'm going to spend $100. And if you don't have her for a hundred dollars it's good bye. And by the way the quality better be the same.
GOETZ: But it's not exactly a win for consumers because despite the low prices, shoppers have less money. Davidowitz says discount stores, especially dollar stores, are in a sales boom. The problem is they don't sell cashmere. For NPR News, I'm Kaomi Goetz in New York.
COHEN: Stay with us on Day to Day from NPR News.
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