Darlene Quinn thinks that Federal Reserve Chairman Ben Bernanke sounds like a reverse Chicken Little.
For the last two weeks, the head of the Fed has been declaring the recession is already over, even if it doesn’t feel like it, and that recovery is around the corner. Quinn – a former senior executive with the Bullocks Wilshire department store chain and author of the novel Webs of Power from Emerald Book Company (www.darlenequinn.net) – translated Bernanke’s comments to mean, “things are less bad than they were.”
“Part of me has to wonder if the Fed chair is saying what he’s saying to help us avoid a fourth quarter retail bloodbath like we had last year, or if he really believes what he’s saying,” she said. “The truth is, I don’t think he’s too far off track, but let’s not fool ourselves. Some very specific things have to take place in order for retailers to be able to say they are recovering from the recession, and those things aren’t going to completely fall in line until the beginning of 2011.”
One Step Up, No Steps Back – The first thing that needs to happen is that retailers need to be able to post a gain over last year’s numbers, according to Quinn.
“We don’t have to post a huge gain, but we have to post a gain of some kind,” she said. “Even if it’s one-tenth of one percent, we need to see an advance over last year’s numbers, if only so we can say that we haven’t lost any more ground. We can’t move forward if we don’t stop the bleeding, so that’s the first requirement before recover comes home to roost.”
The Return of “Value” Shoppers – Quinn believes that the recession cost American retailers one of its most important customers, the “value” shopper.
“There are essentially three kinds of consumers in the mass market,” she said. “There are ‘price’ shoppers, whose primary concern is the cost of goods. They are typically middle to lower middle class, blue collar folks who have tight budgets, so they shop at discount big box stores like Wal-Mart. On the other extreme, there are ‘luxury’ shoppers who have money regardless of the economic conditions. They summer in the Hamptons, and they buy luxury all the way in both goods and services. The recession doesn’t affect them any more than a stiff breeze. They’ll always buy what they want, when they want. In the middle is the ‘value” shopper, who is typically middle to upper middle class, and they don’t mind paying a few extra dollars for extra service and better quality. ‘Value’ shoppers became ‘price’ shoppers during the recession. They fled the mall department stores so they could push a cart at Wal-Mart or Target.”
For true recovery to be imminent, the “value” shopper must re-emerge from the discount stores and head back to the department stores, Quinn added.
“That middle group represents the growth of the economy,” she said. “The money lost in the retail industry was lost primarily because that middle group of consumers in the middle classes stopped spending discretionary income, because they just plain didn’t have it to spend. If 2010 is going to show some solid growth, we need to see the ‘value’ shopper come back to the mall, and retailers need to empower their managers and employees to really go the extra mile to attract that customer back to the fold.”
2010: A Holiday Odyssey – The final piece of the puzzle is the fourth quarter of 2010, Quinn said.
“The holiday season after this one is where the rubber will meet the road,” she said. “If we stop the bleeding this year, then we should be able to walk again by next year. If the fourth quarter retail receipts of 2010 show a solid increase, maybe 3 to 5 percent, we’ll be able to pop the champagne corks on New Year’s Eve feeling like we’ve turned the corner. Retailers need to get smart and start thinking of being more customer-centric so that they can convert ‘price’ shoppers back to being “value” shoppers and help push the market down the road to recovery.”