Retailers must get creative, involved

Published: Wednesday, January 14, 2009 at 6:01 a.m.
Last Modified: Tuesday, January 13, 2009 at 11:04 p.m.

NEW YORK - Retailers need to offer customers more services to make themselves indispensable and work with the government to help solve economic and social woes even as they deal with seismic changes in consumer behavior, industry leaders said Monday.

Departing Wal-Mart CEO Lee Scott told retailers they need to get involved in broader issues such as health care, immigration, energy independence and environmental sustainability, and said that doing so would resonate with shoppers and improve the bottom line.

"We need to tackle the hard issues," Scott said at the annual National Retail Federation convention, noting that retailers in particular are close to what consumers are thinking. "As businesses we have a responsibility to society. We also have an extraordinary opportunity."

Retailers have just come off the worst holiday season in four decades, as people watch their spending because of worries about job security, their retirement funds and the value of their home. That's already meant falling sales and profit warnings at many retailers and could mean more bankruptcies to come.

Over the past year, the retail industry has been in the midst of a "great transformation" as consumer spending dropped and credit tightened, said Carl Steidtmann, the chief economist of consumer business at Deloitte Research.

Following an "orgy of debt" in the early part of the decade, "the consumer is no longer in a position to spend," he said. "Retailers are in a 'no-growth' environment."

The consumer-spending slowdown will likely be long-lasting, Steidtmann said, particularly as baby boomers who have been typically big spenders move into their 60s and 70s, spend less and downsize their homes.

While a new economic stimulus package from the government will have "some impact" on the economy such as more credit availability, Scott said, he doesn't expect a quick rebound.

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