Many are well aware of what the recent recession has done to clothing stores. In fact, the department stores themselves are well aware with the decline of clothing sales. When higher cotton and labor costs across the sector meet shoppers who are contending with lofty unemployment,as well as a weak housing market and high food and fuel prices, this can contend as a perfect storm… but Wal-Mart Stores Inc. is ready for it.
Wal-Mart plans to help alleviate that pressure with its low-price business model, but is working to find the right formula for apparel. “From Brazil to Silicon Valley, I’ve visited more than 75 stores in this quarter,” said Mike Duke, Wal-Mart’s president and chief executive officer. “Everywhere I go, I see customers working hard to make ends meet. Inflation and gas prices are adding to the pressures.”
“We’re investing in prices,” said Bill Simon, president and CEO of the U.S. discount division, indicating the retailer will pay up to offset higher supply costs. “We recognize that customers are seeing higher prices across the industry for cotton-related apparel.”
“We see the uncertainty in the marketplace about sourcing and pricing as an opportunity for our business,” said Carol Meyrowitz, CEO of TJX which owns TJ Maxx and Marshall stores. “The key for us is relative value. If other retailers pass on cost to consumers and our pricing umbrella rises, this should allow us to drive merchandise margins while maintaining our value gap.” If other retailers absorb rising costs, Meyrowitz said TJX could adjust its product mix, keeping prices down and sustaining margins.
So, this means that in order to keep in competition, department and specialty stores like Target and Sears could see a change in the way their current prices are handled. Stay tuned…