Shop Talk

Retailers, consumers and prices

from Raw Japan:

Retailers do well by going cheap

Japan is back in deflation, and price falls look like gathering pace as shoppers' bargain-hunting leads stores to cut prices further to weather the worst retail slump in decades.

Retailers large and small reported hard falls in quarterly profits last week, and the few bright spots were focused on those drawing in thrifty shoppers with their cheap but well-made goods.

FAST-RETAILING/

Fast Retailing tops the list, as its Uniqlo stores thrive in tough times by selling T-shirts for $10 -- that's cheap here -- and other clothing at similar bargain prices. The company is also seeing strong sales growth at its other basic apparel chain g.u.

g.u., the cut-rate sibling of already-cheap Uniqlo, had a low profile for years but shoppers started flooding in after it slashed prices across the board and started flogging $11 jeans and $5 T-shirts this year.

Check Out Line: Commodities trump kisses at Hershey

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hershey.jpgCheck Out how higher commodity costs offset the benefit of a higher prices at Hershey.

Back in August, Hershey announced a roughly 10-percent price increase in the United States as it tried to deal with higher costs for cocoa, corn sweetener, sugar and peanuts.

The view from the executive suite

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    Consumer products and retail executive spoke at conferences hosted by, respectively, Lehman Brothers and Goldman Sachs on Wednesday. Here is some of what they had to say:

    “There is no option not to take price,” — David Moran, president and CEO, Heinz North America, said on the the likelihood of more price increases.
    
    “The macroeconomic conditions will be worse than they were 12 months ago. Our expectation is for caution,” — Tim Boyle, chief  executive of Columbia Sportswear, when asked how the environment six to 12 months ahead looks to the sportswear and outerwear maker.
    
    “We think that despite what is happening in the environment, to neglect your store base and not keep it competitive is the wrong thing to do,”  — Kohl’s Chairman Larry Montgomery on the department store’s is commitment to remodel 36 stores in 2008 and about 60 in 2009, as well as opening 50 new stores next year.
    
    “We don’t think it’s as dire as other people are saying. We’re fairly resistant. Eighty-five percent of our sales are in RX (prescriptions). The remainder are in toothpaste and deodorant and hopefully people will keep buying those.” –    Thomas Ryan CVS Caremark chief executive and board president.

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