By Andria Cheng
NEW YORK (Dow Jones) -- With retailers reeling from the global
recession, initiatives such as Wal-Mart Stores Inc.'s Great Value
private-label expansion or Macy's Inc.'s "My Macy's" will likely be
adopted by even more retailers, as industry players fight for the
ever-more-discerning consumer's money.
Retailers also will likely downsize their packaging, store size
and even their growth expectations, as part of a long-term trend to
emerge from the economic downturn that's changed consumer behavior,
according to a joint report of consulting firms
PricewaterhouseCoopers and Retail Forward.
Retail sales, excluding automobile and gasoline, are expected to
be flat this year before rebounding in 2010. That compared against
a 1.8% increase in 2008 and below the 5% average inflation-adjusted
pace in the decade prior to 2008, the report said.
In response to rising job losses and the declining stock and
housing markets, three quarters of consumers have significantly or
somewhat changed their shopping behavior -- trimming purchases,
increasingly seeking deals and coupons, and trading down to cheaper
store brands, according to the Retail Forward survey of 4,000 U.S.
primary household shoppers.
That has forced retailers to change their game plan, the report
said.
"The economic shocks will precipitate the end of many cycles
that shaped the industry during the first part of the decade," the
report said. "The relative winners on the retail battlefield over
the past few months are already proving the relevance of the
emerging trends."
Wal-Mart this month reintroduced its Great Value brand, first
unveiled in 1993, with expansion into 80 new products, from organic
cage-free eggs to thin-crust pizza. Grocery has been a key traffic
driver for Wal-Mart as consumers lower their discretionary
spending, analysts have said.
In addition to Wal-Mart (WMT), Best Buy Co. (BBY) and Kohl's
Corp. (KSS) have also expanded their private label offerings, as
"trading down to private brands is among the most prevalent changes
in shopping behavior," the report said.
Analysts said Wal-Mart's relaunch of its Great Value
private-label grocery line is expected to help it bolster profit,
with the products proving more profitable for the retailer than
national labels.
As consumer-spending cutbacks lead to less room for retail
expansion, more stores also will follow the lead of retailers such
as Macy's (M), which is rolling out nationwide its My Macy's
initiative to tailor its merchandise to specific customer segments
and local markets instead of relying on adding stores to spur
growth, the report said.
Among other trends, retailers are using more limited editions
and smaller runs to excite shoppers and sell more products at full
price.
As more stores close amid an industry consolidation, more
exclusive partnerships also will be seen. For instance, People's
Liberation denim brand inked a deal with teen retailer Charlotte
Russe (CHIC) to sell its line of apparel exclusively at the
clothing chain, the report said.
Consumers' increased access to information through smart phones
and other devices also will change the retail landscape, as
shoppers rely increasingly on product ratings and reviews.
Meanwhile, more retailers also are adding complementary and even
unrelated categories in their stores to become one-stop shops, the
report said.
With last year's increase in gasoline prices, retailers such as
Wal-Mart that offered consumers the ability to complete their
purchases in one stop have benefited as consumers curtailed
driving.