Retailers Bank on Back-to-School Success with Slimmer Inventories

A key measuring stick for retailers and the economy as a whole is approaching with the back-to-school selling season (which is difficult to consider as it seems school just ended!). Will consumers who have been holding on to their money in recent months open their wallets to buy clothing, computers, and other items needed to get ready for the new school year? If yes, is it a signal that the economy may be in the early stages of a thaw that could ultimately lead to happier times? If no, does it mean that the recession will continue to inflict misery on consumers and businesses alike?

The answers to the above questions: stay tuned and we will find out. However, if retailers enjoy a spike in sales in the coming weeks they will have to do so with less product assortments for their customers. Unlike last year when most retailers had merchandise in stores when the recession's effects were felt and were forced to deeply discount to move their inventories, this year's store stocks reflect a softer economy. Many stores' shelves are noticeably leaner. It is possible that consumers conditioned to have ample assortments from which to choose may be less satisfied with retailers' offerings this year. If that happens, the much needed boost to the economy from back to school sales may not materialize.

Retailers appear to be in a no-win situation. Too much inventory is expensive to carry and can further hurt profit margins if extensive markdowns have to be taken. Too little inventory may turn off customers who feel they do not have ample choice and opt to go elsewhere, or worse, not spend at all. Here's hoping that retailers meet these challenges and a successful back-to-school selling season is enjoyed by all!

The Wall Street Journal - "Stores Anxiously Watch Back-to-School Sales"

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