Retailers, consumers and prices
Check out the strong quarterly profit at discount retailer Dollar General.
The company, which prices most of its merchandise below $10, posted a stronger-than-expected profit thanks to bargain-seeking consumers who spent more per visit. Company executives talked of building sales momentum during the quarter and sales results in the current three-month period were encouraging.
As a result, Dollar General, which has received a boost from high U.S. unemployment rates, raised its full-year earnings forecast.
U.S. consumer spending rose in July at the strongest pace in four months, offering hope that consumers will be able to keep contributing to a modest economic recovery.
Meanwhile, overseas the message was mixed as Carrefour, Europe’s top retailer, said the summer sales trend was mixed in Europe but demand was holding up in emerging markets. Company executives acknowledged sales trends in Europe in August were slightly disappointing after a satisfactory July.
From our apparel reporter Nivedita Bhattacharjee:
Luxury brands in the United States might still have a lot to learn from the entrenched design houses in Europe, but their commitment to pleasing the customer serves them well as the market returns from recession.
Milton Pedraza, Chief Executive of the Luxury Institute, told us during the Reuters Global Luxury Summit today that the commitment to customer service could even become a real point of differentiation for American brands.
“The American brands and even the Burberrys of the world tend to be better at customer-centricity, at service, and could make that a competitive advantage, because the Europeans are not as service-oriented, more product-oriented,” he said.
“The Europeans are not as service-oriented, (they are) more product-oriented, and they will even tell you that.”
If one is looking for an explanation behind the attitudes, Pedraza invoked a time well before Hermes opened its doors in 1837.
“A French executive told me that the word ‘service’ … is equated with servility and (goes) back to the French revolution and is why the French don’t like to serve anybody.”
from Summit Notebook:
So, what did we learn from executives in the hard-hit luxury and main street retail sectors this week at the Reuters summits?
Chief executives from Burberry Group, Hermes, Tiffany, Rolls-Royce and Richmont’s Van Cleef & Arpels are among the many officials who will speak this week at Reuters’ first-ever Global Luxury Summit about what their sector is facing amid a recession that has even well-heeled consumers dialing back spending.
In a new report, Bain & Co predicts sales of luxury goods are expected to drop 10 percent this year and not recover fully until 2012.
The survey, conducted by a research firm called The Luxury Institute, found Leiber scored highest on its “Luxury Brand Status Index”, which includes measurements for quality, exclusivity, social status and self-enhancement (meaning the brand can make the buyer feel special).