Tom Shay’s e-ret@iler conversations

You have probably read more than one article like this. The solution comes from first having reasonable expectations of sales. You should also know this is a great opportunity to get deals on merchandise from vendors.

Anticipate your inventory needs; underspend according to that anticipation and look for deals from vendors.

NEW YORK – As consumers get ready to celebrate July Fourth, many merchants already have dismissed summer as a washout.

Macy’s flagship store has racks of summer tops, swimwear and dresses marked down as much as 50 percent, while luxury retailer Bergdorf Goodman is slashing prices on designer goods by as much as 70 percent. Meanwhile, piles of clothing as well as barbecue grills, tents and gardening tools are bypassing stores and heading straight to liquidators as merchants try to conserve their cash.

Such deep discounting so early in the season is great news for bargain hunters, but it’s a worrisome sign that shows a further weakening in retail sales since the end of May.

Consumers’ confidence in the economy, which had surged in April and May, is projected to be virtually unchanged for June when The Conference Board releases figures today.

Though unusually rainy weather across a broad swath of the country has slowed business, some analysts wonder whether shoppers are waking up to the harsh reality that the economy won’t be getting better anytime soon.

That doesn’t bode well for merchants, which need to get rid of summer inventory quickly to make room for fall goods that start to arrive next month.

BMO Capital Markets analyst John Morris estimated that the volume and size of discounts for mall-based apparel retailers he tracks is 10 percent higher than last June even though inventory is down 20 percent.

“It’s the economy, not the weather,” said Ahmed Youssef, a 28-year-old junior engineer from Jersey City, explaining why he has stuck to only necessities like groceries at Wal-Mart and computer accessories such as an $80 hard drive at Staples.

Pam MacWilliams, a tourist from Oshkosh, Wis., who on a recent Thursday was planning to scour for bargains at H&M’s midtown Manhattan location with her two girls, said she’s becoming less optimistic about a quick economic recovery.

“I thought that the economy would turn faster,” MacWilliams said. “I had high expectations. Now, I want to save more.”

Employers are still cutting jobs — although at a slower rate — and home prices are still falling, and now Americans are seeing a three-month stock market rally stall.

Consumers’ confidence in the economy has been rebounding since February, fueled in part by the stock market rise. But that improved mood hasn’t translated into much relief for merchants because confidence levels are still well below the measure that’s considered healthy.

Nor were Friday’s government economic reports comforting to merchants. They showed that households used most of their government stimulus payments to boost savings to the highest level in more than 15 years in May, instead of splurging at the mall.

“There was a lot of hope with the surge in confidence,” said Dennis Jacobe, Gallup’s chief economist. He added that consumers were convinced that the second half would be better but he noted, “you can live on that hope for only so long.”

I have explained the correct concept in many presentations. If you plan to order $10,000 in merchandise from a manufacturer or wholesaler, and their minimum order is $2,000 you do not write a $10,000 order. You write five $2,000 orders with five different delivery dates.

As you progress into the season, you make changes to the orders based upon your local economic conditions. In my years of retail experience, I have never found a vendor to refuse to make a change to one of these orders.

The idea of ‘just not ordering’ as shown in this article is simply WRONG!

Retailers put off spring buying

Tue Aug 26, 2008 2:03pm EDT

By Alexandria Sage

LAS VEGAS (Reuters) – Cautious apparel buyers are foregoing orders to be delivered months down the road and instead are buying for the moment, unwilling to take on excess inventory and unsure over what the future holds.

At the Magic Marketplace apparel trade show in Las Vegas, the largest such convention in the United States, apparel vendors and the retailers that sell their styles agreed that placing orders in August for spring is the exception, rather than the rule, in a sharp change from recent years.

The reason is insecurity over inventory levels in a difficult U.S. retail environment, where shoppers have curtailed spending on items such as apparel and footwear amid other more pressing concerns, such as higher gasoline and food prices.

“With the difficulties in the economy, stores seem to want to buy closer to their needs … rather than buying six to nine months ahead,” said Donald Leavy, vice president of sales and marketing at Vintage Paris.

At the company’s booth, clothes on display included a puffy, short black jacket, a chunky sweater and a leopard trench coat — all appropriate for fall or winter, not spring.

Retailers, aware that too much unsold product in their stores leads to liquidations and lower profit margins, aren’t taking a gamble on styles that may or may not succeed next spring. “At-once” orders, however, are delivered far sooner, when the retailer has a better take on the pulse of the consumer.

David Wolfe, creative director of retail consultancy The Doneger Group, argued that the delivery calendar that vendors follow is out of whack.

Fall products are usually delivered in August or September, when the weather is still warm, meaning that customers are presented with scarves and outerwear when they’re still thinking about shorts and sundresses.

“If we started delivery when the customer wants it, she might actually pay full price,” Wolfe said during a presentation to retail buyers.

The difficulty of knowing how much to stock has played out this quarterly earnings period, as publicly traded retailers posted a range of inventory levels, from the 17 percent decline per square foot at Gap Inc, one of the largest global apparel retailers, to the 3.7 percent inventory decline at department store Macy’s Inc.

“With fall and back-to-school in full swing, and inventory levels seasonally high, we believe retailers remain on edge,” wrote Brean Murray Carret analyst Eric Beder in a note published Monday.

Sometimes, paring back inventory goes too far, as in the case of women’s apparel retailer Bebe Stores Inc, which recently blamed declining same-store sales in part on too-light inventory levels.

And if retailers are too cautious, buying “at-once” orders helps them quickly fill emptying shelves, when they are better attuned to what their customers want — now.

“We felt people under-bought,” said Margaret Cox, who represents the Los Angeles-based Christine Phillipe line of women’s clothing. “Now they’re here saying, ‘What can I have now?’”

Immediate orders help retailers avoid the embarrassing phenomenon of having yesterday’s trends in their stores.

“This is exactly as if you are buying milk or bread. It has an expiration date,” said Kambiz Hakimi, owner of the Mesmerize brand, waving his arm in the direction of the bold animal print and tribal design dresses for fall or holiday that he sells to department stores, catalogs and boutiques.

But perhaps the biggest challenge arises when your market suddenly leaves the country. Buyers at the Naval Exchange, responsible for stocking everything from T-shirts to suits at stores on Naval bases, are sometimes confronted with mass deployments and are forced to move inventory around the country to bases with fewer deployed service members.

“Sometimes we get a week’s notice,” said buyer Donald Jeresa.